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Protecting Your Loved Ones with Life Insurance

Protecting Your Loved Ones with Life Insurance

How much life insurance do you need?

Your life insurance needs will depend on a number of factors, including the size of your family, the nature of your financial obligations, your career stage, and your goals. For example, when you’re young, you may not have a great need for life insurance. However, as you take on more responsibilities and your family grow, your need for life insurance increases.

Here are some questions that can help you start thinking about the amount of life insurance you need:

    • What immediate financial expenses (e.g., debt repayment, funeral expenses) would your family face upon your death?
    • How much of your salary is devoted to current expenses and future needs?
    • How long would your dependents need support if you were to die tomorrow?
    • How much money would you want to leave for special situations upon your death, such as funding your children’s education, gifts to charities, or an inheritance for your children?
    • What other assets or insurance policies do you have?

Types of life insurance policies

The two basic types of life insurance are term life and permanent (cash value) life. Term policies provide life insurance protection for a specific period of time. If you die during the coverage period, your beneficiary receives the policy’s death benefit. If you live to the end of the term, the policy simply terminates, unless it automatically renews for a new period. Term policies are typically available for periods of 1 to 30 years and may, in some cases, be renewed until you reach age 95. With guaranteed level term insurance, a popular type, both the premium and the amount of coverage remain level for a specific period of time.

Permanent insurance policies offer protection for your entire life, regardless of your health, provided you pay the premium to keep the policy in force. As you pay your premiums, a portion of each payment is placed in the cash-value account. During the early years of the policy, the cash-value contribution is a large portion of each premium payment. As you get older, and the true cost of your insurance increases, the portion of your premium payment devoted to the cash value decreases. The cash value continues to grow–tax deferred–as long as the policy is in force. You can borrow against the cash value, but unpaid policy loans will reduce the death benefit that your beneficiary will receive. If you surrender the policy before you die (i.e., cancel your coverage), you’ll be entitled to receive the cash value, minus any loans and surrender charges.

Many different types of cash-value life insurance are available, including:

    • Whole life: You generally make level (equal) premium payments for life. The death benefit and cash value are predetermined and guaranteed (subject to the claims-paying ability and financial strength of the issuing insurance company). Your only action after purchase of the policy is to pay the fixed premium.
    • Universal life: You may pay premiums at any time, in any amount (subject to certain limits), as long as the policy expenses and the cost of insurance coverage are met. The amount of insurance coverage can be changed, and the cash value will grow at a declared interest rate, which may vary over time.
    • Indexed universal life: This is a form of universal life insurance with excess interest credited to cash values. But unlike universal life insurance, the amount of interest credited is tied to the performance of an equity index, such as the S&P 500.
    • Variable life: As with whole life, you pay a level premium for life. However, the death benefit and cash value fluctuate depending on the performance of investments in what are known as subaccounts. A subaccount is a pool of investor funds professionally managed to pursue a stated investment objective. You select the subaccounts in which the cash value should be invested.
    • Variable universal life: A combination of universal and variable life. You may pay premiums at any time, in any amount (subject to limits), as long as policy expenses and the cost of insurance coverage are met. The amount of insurance coverage can be changed, and the cash value and death benefit goes up or down based on the performance of investments in the subaccounts.

With so many types of life insurance available, you’re sure to find a policy that meets your needs and your budget.

Choosing and changing your beneficiaries

When you purchase life insurance, you must name a primary beneficiary to receive the proceeds of your insurance policy. Your beneficiary may be a person, corporation, or other legal entity. You may name multiple beneficiaries and specify what percentage of the net death benefit each is to receive. If you name your minor child as a beneficiary, you should also designate an adult as the child’s guardian in your will.

What type of insurance is right for you?

Before deciding whether to buy term or permanent life insurance, consider the policy cost and potential savings that may be available. Also keep in mind that your insurance needs will likely change as your family, job, health, and financial picture change, so you’ll want to build some flexibility into the decision-making process. In any case, here are some common reasons for buying life insurance and which type of insurance may best fit the need.

Mortgage or long-term debt: For most people, the home is one of the most valuable assets and also the source of the largest debt. An untimely death may remove a primary source of income used to pay the mortgage. Term insurance can replace the lost income by providing life insurance for the length of the mortgage. If you die before the mortgage is paid off, the term life insurance pays your beneficiary an amount sufficient to pay the outstanding mortgage balance owed.

Family protection: Your income not only pays for day-to-day expenses, but also provides a source for future costs such as college education expenses and retirement income. Term life insurance of 20 years or longer can take care of immediate cash needs as well as provide income for your survivor’s future needs. Another alternative is cash value life insurance, such as universal life or variable life insurance. The cash value accumulation of these policies can be used to fund future income needs for college or retirement, even if you don’t die.

Small business needs: Small business owners need life insurance to protect their business interest. As a business owner, you need to consider what happens to your business should you die unexpectedly. Life insurance can provide cash needed to buy a deceased partner’s or shareholder’s interest from his or her estate. Life insurance can also be used to compensate for the unexpected death of a key employee.

Review your coverage

Once you purchase a life insurance policy, make sure to periodically review your coverage; over time your needs will change. An insurance agent or financial professional can help you with your review.

Your life insurance needs will depend on a number of factors, including whether you’re married, the size of your family, the nature of your financial obligations, your career stage, and your goals. Life insurance is not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association.

A note about variable life and variable universal life insurance

Variable life and variable universal life insurance policies are offered by prospectus, which you can obtain from your financial professional or the insurance company. The prospectus contains detailed information about investment objectives, risks, charges, and expenses. You should read the prospectus and consider this information carefully before purchasing a variable life or variable universal life insurance policy.

IMPORTANT DISCLOSURES

This material was prepared by Broadridge Investor Communication Solutions, Inc. This information is believed to be from reliable sources; however, no representation is made as to its accuracy or completeness. This information does not constitute tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty, nor is it a solicitation or recommendation to purchase or sell any insurance or investment product or service, and readers should not rely upon it as such. Readers should seek such advice from their own tax or legal counsel or financial professional.

why people don't have life insurance

4 Reasons Why People Don’t Have Life Insurance

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why people don't have life insurance

There’s nothing exciting about life insurance. But it’s not meant to get you hyped up. It’s meant to take care of you and your loved ones. Life insurance is designed to protect your income in the unfortunate event of your passing, whether too early or at a ripe old age. But who wants to think about that? We all love the idea of YOLO (You Only Live Once), but no one likes to think about that “only living once” is referencing the end.

This may produce the type of consumer who shies away from thinking that life insurance is a necessary option. Even worse, a consumer who purposely doesn’t think about it and develops inaccurate opinions about life insurance. Here are 4 reasons why people don’t have life insurance and why they’re not entirely understanding the truth behind a much-needed piece in their financial portfolio.

The Cost is Too High

The first mistake many people make is over-estimating the cost of life insurance for a variety of reasons — age, gender, pre-existing conditions, etc. — and that stems from not knowing the facts. 44% of Millennials estimate the annual cost for a 20-year term life insurance policy at $1000 a year. But, in reality, they could purchase one for around $165 a year.

There are Other Financial Priorities

Life insurance is about the unexpected. It’s natural for more tangible concerns to take precedence. Student loan debt, retirement planning, credit card debt, mortgage payments are all examples of more pressing money concerns. No one thinks about the unexpected, hence the definition of the term. As human beings we sometimes have tunnel vision to only perceive that which is in front of us.

Life Insurance is a different form of protection. It covers that which we cannot perceive. But it’s also not only about you, but what comes after you. Your loved ones. Those who you certainly do not want saddled with the debt you may leave behind. Purchasing life insurance is an important financial priority that you should not, and cannot, ignore.

Unsure of the Need

You’re never too young for life insurance. Much like planning for retirement, the earlier you start, the more financially protected you will be. Plus, your younger age will have you qualifying for lower premiums. If you develop health issues as you get older, there’s no longer a concern about getting life insurance at a higher price. You’re already covered.

You’re also never too old for life insurance. Policies may come with a higher premium, but you will be able to cover the costs of any debt you have incurred once you pass. Plus, any final expenses such as burial fees and estate closings will no longer be the responsibility of your loved ones.

Believe You Don’t Qualify

While the policies may be more expensive for those with pre-existing conditions, they still exist for the specific purpose to cover those with health issues such as diabetes. If you’re concerned about risk factors disqualifying you for life insurance, don’t consider that door closed to you. Talk with a financial professional about your options. Tailored life insurance plans are available.

insurance coverage

Closing Gaps in Your Insurance Coverage

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insurance coverage

Buying insurance is about sharing or shifting risk, but you may think you’re covered for specific losses when, in fact, you’re not. Here are some common coverage gaps to consider when reviewing your own insurance coverage.Life Insurance

In general, you want to have enough life insurance coverage (when coupled with savings and income) to allow your family to continue living the lifestyle to which they’re accustomed. But changing circumstances may leave a gap in your life insurance coverage.

For example, if you have life insurance through your employer, a job change could affect your coverage. Your new employer may not offer the same amount of insurance, or the policy provisions may differ. Review your income, savings, and expenses annually to help ensure that the amount of life insurance you have matches your needs.

Homeowners Insurance

It may not be clear from reading your homeowners policy which perils are covered and how much damage will be paid for. It’s important to know what your homeowners policy covers and, more important, what it doesn’t cover.
You might think your insurer would pay the full cost to replace your home if it were destroyed by a covered occurrence. But many policies place a cap on replacement cost up to the face amount stated on the policy. You may want to check with a building contractor to get an idea of the replacement cost for your home, then compare it to your policy to be sure you have enough coverage.

Even if your policy states that “all perils” are covered, most policies carve out many exceptions or exclusions to this general provision. For example, damage caused by floods, earthquakes, and hurricanes may be covered only by special addendums to your policy, or in some cases by separate insurance policies altogether. Also, your insurer may not cover the extra cost of rebuilding attributable to more stringent building codes, or your policy may limit how much and how long it will pay for temporary housing while repairs are made.

To help avoid these gaps in coverage, review your policy annually with your insurer. Also pay attention to notices you may receive. What may look like boilerplate language could actually be significant changes to your coverage. Don’t rely on your interpretations — ask for an explanation from your insurer or agent.

Auto Insurance

Which drivers and what vehicles are covered by your auto insurance? Most policies provide coverage for you and family members residing with you, but it’s not always clear-cut. For instance, a child who is living in a college dorm is probably covered, but a child who lives in an off-campus apartment might be excluded from coverage. If you and your spouse divorce, which policy insures your children, particularly if they are living with each parent at different times of the year? Notify your insurer about any change in living arrangements to avoid a gap in coverage.

Other gaps include no coverage for damaged batteries, tires, and shocks. And you might not be covered for stolen or damaged mobile phones or other electronic devices. Your policy may also limit the amount paid for a rental while your vehicle is being repaired.


In fact, insurance coverage for rental cars may also pose a problem. For instance, your own collision coverage may apply to the rental car you’re driving, but it may not pay for all the damage alleged by a rental company, such as loss of use charges. If you’re leasing a car long term, your policy may cover the replacement cost only if the car is a total loss or is stolen. But that amount may not be enough to pay for the outstanding balance of your lease. Gap insurance can cover any difference between what your insurer pays and the balance of your lease.


Policy terms and conditions aren’t always easily understood, and you may not be sure what’s covered until it’s time to file a claim. So review your insurance policy to help ensure you’ve filled all the gaps in your coverage.

your financial plan

Choosing the Right Disability Insurance Plan: A Comprehensive Guide

your financial plan

Have you ever wondered how you would manage if you suddenly fell ill or were in a debilitating accident? What would you do if you’re unable to earn a living or financially take care of yourself and your loved ones?

According to data published as of 2021, 13% of adults have at least one disability. Only 31.1% of people with disabilities are in active employment compared to 74.8% of people without disabilities, increasing their exposure to financial hardships.

Disability insurance (DI) provides a safety net, enabling you to meet your financial obligations as you recuperate or forebear with disability. It’s an insurance policy that supplements between 50% and 80% of your income when you cannot work or earn because of disability.

What to Consider When Choosing a DI Plan

Benefit Amount

The insurance benefit from a DI plan is 60% to 70% of income earned 5 to 18 months before your first claim. Most DI insurers cover up to 60% of the insured income. It’s crucial to consider your ongoing expenses and desired lifestyle after a disability when choosing a benefit amount. Consider your debts, dependents, benefit duration, renewability provision, elimination period, and future increase to ensure your finances meet all your developing financial obligations after disability.

Elimination Period

The period between insurance issuance and benefit claim after illness or injury is the elimination period. Insurers use this period to ascertain if you meet the benefit criteria. You’re liable for your medical expenses and lost income during this duration.

It typically occurs between 30, 60, 90, or 365 days. The shorter the duration, the higher the premium cost. A short duration means the insurer starts paying benefits sooner, translating to increased risks for them as claims get shelled faster. Consider your financial situation and risk tolerance. A long elimination period is beneficial if you have an emergency fund or are comfortable taking on risks.

Occupation Type

Disability coverage language varies between insurers. Some insurance companies provide an “own occupation” plan, which defines total disability as a condition preventing the insured from performing their duties in their regular job, even though they can seek another type of employment. On the other hand, some insurers provide “any occupation” coverage, which defines total disability as inability to work.

Own-occupation DI is generally more expensive but offers better protection, especially for specialized professions. For instance, a surgeon can become disabled if they develop tremors, making it impossible to perform operations. The own-occupation policy provision does not disqualify them when they can still work in diagnostic medicine. However, the any-occupation coverage disqualifies them if they can still earn a living by performing any task in their occupation.

Your occupation determines the type of plan you get. Construction workers may need an own-occupation coverage because of the risks involved in their line of work. Any-occupation insurance policy is perfect for employees in specialized fields involving education, training, and experience. 

Future Earning Potential

You may also want to consider a DI with a future purchase option rider, especially if you’re young with a rising earning potential or in a fast-growing field. Increasing your benefits adds a layer of protection to your finances, securing your future according to your rising income.

Additional Considerations

Other factors to consider when choosing a DI include cost-of-living adjustments. Inflation can reduce the value of your benefits. Therefore, choosing a policy with provisions for future adjustments is essential. You can also consider residual benefits riders to supplement a portion of your income in case of partial disability significantly reducing your income.

Shopping for Disability Insurance

Due diligence is essential when looking for DI. Aside from personal considerations, get quotes from multiple insurers to compare plans and pricing. Work with a financial advisor or insurance broker to understand the fine print for every potential DI and personalized guidance resonating with your present and future financial obligations and objectives.

Get The Appropriate DI Plan Today

Choosing the right DI plan requires research and financial insights. Understand your current and future financial obligations, DI prerequisites, and how your profession affects your benefits to choose a policy suitable for your conditions. It’s also crucial to compare plans to get cost-effective coverage. DI is an effective financial safety net in case of disability. Talk with a financial professional at Barnum Financial Group for tailored guidance today.

buy long-term care insurance

Should You Buy Long-Term Care Insurance?

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The longer you live, the greater the chances you’ll need some form of long-term care. If you’re concerned about protecting your assets and maintaining your financial independence in your later years, long-term care insurance (LTCI) may be for you.

Who needs it?

As we age, the odds increase that we’ll need some form of long-term care at some point during our lives. And with life expectancies increasing at a steady rate, the likelihood of needing long-term care can be expected to grow in the years to come.

But won’t the government look out for me?

Medicare pays nothing for nursing home care unless you’ve first been in the hospital for 3 consecutive days. After that, it will pay only if you enter a certified nursing home within 30 days of your discharge from the hospital. For the first 20 days, Medicare pays 100 percent of your nursing home care costs. After that, you’ll pay $185.50 in 2021 per day for your care through day 100, and Medicare will pick up the balance. Beyond day 100 in a nursing home, you’re on your own–Medicare doesn’t pay anything.

If you’re at home, Medicare provides minimal short-term coverage for intermediate care (e.g., intravenous feeding or the treatment of dressings), but only if you’re confined to your home and the treatments are ordered by a doctor. Medicare provides nothing for custodial care, such as help with feeding, bathing, or preparing meals.

Medicaid covers long-term nursing home costs (including both intermediate and custodial care costs) but only for individuals who have low income and few assets (eligibility guidelines vary from state to state). You will have to use up most of your savings before you qualify for Medicaid, and aside from a small personal needs allowance, you will have to use all of your retirement income, including Social Security and pension payments, to pay for your care before Medicaid pays anything. And once you qualify for Medicaid, you’ll have little or no choice regarding where you receive care. Only facilities with Medicaid-approved beds can accept you, and your chances of staying in your own home are slimmer, because currently most states’ Medicaid programs only cover limited home health care services.

Looking out for yourself

If you want to retain your independence, protect your assets, and maintain your standard of living while at the same time guaranteeing your access to a range of long-term care options, you may want to purchase LTCI. This insurance might be right for you if you meet the following criteria:

  • You’re between the ages of 40 and 84
  • You have significant assets that you would want to preserve as an inheritance for others or gift to charity
  • You have an income from employment or investments in addition to Social Security
  • You can afford LTCI premiums (now and in the future) without changing your lifestyle

Once you purchase an LTCI policy, your premiums can go up over time, but the rates can only rise for an entire class of policyholders in your state (i.e., all policyholders who bought a particular policy series, or who were within certain age groups when they bought the policy). Any increase must be justified and approved by your state’s insurance division.

Several factors affect the cost of your long-term care policy. The most significant factors are your age, your health, the amount of benefit, and the benefit period. The younger and healthier you are when you buy LTCI, the less your premium rate will be each year. The greater your daily benefit (choices typically range from $50 to $350) and the longer the benefit period (generally 1 to 6 years, with some policies offering a lifetime benefit), the greater the premium.

IMPORTANT DISCLOSURES

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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