Family Insurance Planners Blog
Family Insurance Planners Blog
If you are the sole owner of your business, what do you think your business is worth? What’s the value of your assets – land, buildings, inventory, accounts receivable, goodwill, profits, etc.? Question – could you sell the business for that figure?
The next question is what would your business be worth without you, in the event something happened to you? Who would buy the business, and at what price and, how long would it take your family to sell it if they needed to?
If you own your business with a partner, have you considered what you would do if something happens to your partner or vice versa? Do your heirs or your partner’s heirs want to continue the partnership?
All of these questions need to be considered if you are a business owner. Survivor planning, agreements and life insurance can go a long way in taking care of these “what ifs”.
Most people have no idea what this term (Latin for “by roots”) means. Per stirpes is a designation you can include when naming beneficiaries of life insurance policies, investments or your estate that stipulates how your assets should be transferred if any beneficiaries pass away before you. With a per stirpes designation, any amount that you leave for a beneficiary that predeceases you will be passed down evenly to his or her own heirs, usually children. So for example, you name your children as beneficiaries of your life insurance and you and one of your children pass away in an auto accident. A Per Stirpes beneficiary designation would mean your deceased child’s portion of your policy will go to their heirs directly. Otherwise, that child’s portion of the proceeds will go to their surviving siblings.
Recently, several life insurance carriers have announced changes in their premiums for permanent life insurance. Effective in May-June-July, American National, Principal, North American, AIG, Lincoln and Symetra have announced premium increases. Holding off buying life insurance will certainly lead to higher premiums not only because of changes in age and health but now because the industry has begun to reprice these policies.
Both homeowners and auto insurance policies are pretty standard. There may be different features that can be selected but a homeowner’s policy in Louisiana will have the same basic coverage regardless of who issues the policy. This is true of auto insurance as well. That’s because the commissioner of insurance in each state regulates what basic policies must include.
This is not the case with life insurance. Most life insurance policies are different – the language in the policies differ, as well as the rates and benefits. No two insurance company policies are the same. There are a number of reasons for this including the fact that life insurance policies are designed and intended to be in effect for many years. Auto and homeowner policies are contracts generally re-written every year.
These differences lead to buyer confusion. It’s important to deal with a trained and experienced agent or broker to help understand the complexity and to understand the features and benefits of the life insurance policy you purchase.
It’s one of those purchases you don’t make often, similar to buying a house or a car or a business. But it’s also different. When you buy a house or a car, you pick and choose size, style and/or model. And, the financing of these assets can be complicated with the application process, credit checks, setting up monthly payments, etc.
When you buy life insurance, it can be even more complicated. You don’t really get to see the product because you’re actually buying a contract. In the case of a home or car purchase, you can track their values; in fact, your finance company will require a certain loan to value ratio and that the asset is insured for the loan amount or current value. With life insurance, what is the value of what you’re insuring?
I’ll cover more of these comparisons in future posts.
There are more than 700 life insurance companies in the U.S. The largest are MetLife/Brighthouse Finance, Northwestern Mutual, New York Life and Prudential. Most are publicly traded companies owned by stockholders. Some are mutual companies and are, in fact, owned by the policy holders.
Two of the largest mutual companies are New York Life (established in 1845) and Northwestern Mutual (established in 1850). Both companies market their products by what are called “captive agents”. Their products generally can only be sold by “their” agents who are hired and contracted to sell their products and have limited ability to sell products of other companies.
Recently I was playing golf and discussing retirement plans with a friend. You know, all the usual stuff.....When do you plan to retire? How much will you need/want? What kind of return assumption are you using? And the big unknown - how long will your retirement savings have to last?
He had pretty well covered all the areas but of course, his plan (like everyone's) is based on assumptions. There was, however, a missing piece in his assumptions - he hadn't considered the potential need for long-term care for him or his wife.
Statistics show that 70% of people 65 and older will need some form of extended care. Quite commonly, planners forget or ignore the additional +/- $10,000 a month it could cost for this care. That's a big number to plan for! Fortunately, long-term care insurance can fill the gap and ensure the remainder of your retirement plan is protected.
If you haven't explored LTC options, don't delay. As with most insurance, the cost increases as you age. Hybrid policies - life insurance policies with extended care riders - are a great option. These allow you to limit the premium pay period and premiums won't increase. And if you don't need long-term care, the death benefit is available for our beneficiaries.
Welcome to our new insurance agency blog!
This is our very first post. We're not quite sure what we're going to write about here, but the plan is to create helpful content for customers and prospective clients about information that is relevant to you.
We hope you'll come to view this as a top resource for keeping your family and your finances safe.
Here are a few of the topics we may be writing about: