When planning your life insurance, the benefit you’re looking for isn’t one that just gets your family through a year without you before bringing them into a full-blown struggle; no, you want a life insurance benefit that fits into a larger estate plan and ensures that your family is as taken care of as they would have been with you. Here is how to plan your life insurance like a pro:
Setting Your Benefit Number
Estate Planning Young Households
First off, life insurance is a very powerful tool for young families. While we may associate the term life insurance with a work benefit or a 50+ term, this is actually completely be backwards. In the hands of a young policyholder, life insurance can be a life changing benefit for a fledgling family. While nobody wants to think of themselves of their spouse dying unexpectedly, the failure to do so can put a tremendous strain on the family left behind; in addition to mourning your loss, your spouse will now have to deal with everything you contribute to the household alone. Everything from daycare to supporting the family can be a concern, and the benefit from a life insurance policy eases this tremendously.
Talk It Through
It isn’t enough to get a life insurance policy on yourself, your spouse, or both without talking about how that death benefit would be used, invested, and, ultimately, cultivated to create a better future for the family. In this, you and your spouse need to be on the same page to ensure that your life insurance will actually be used correctly in your absence. For instance, if you assume your spouse would invest the money and use the interest to subsidize your financial absence, but your spouse instead opts to take time off of work, stash away money for college, or invest in their own education, then the money may not last as long as it could have. It is crucial that you and your spouse have a clear idea for how a benefit should be used in the event that the worst should happen, otherwise your legacy could be short-lived.
Keep the Change
The best way for your household to thrive in your absence is with a life insurance policy that is large enough to support your family for over 10 years without your income. While that may sound drastic, that sum can actually be a life changing amount of money when used correctly. For instance, if your financial contribution were 50,000 dollars per year, a 500,000 dollar benefit would sustain your family for 10 years if they were to use it directly. However, if your spouse chooses to instead invest the funds in an account that averages over 10% interest annually, then they would be able to draw a 50,000 dollar interest payment each year without ever touching the principle. Then, at the end of the 10 years, they would still have a 500,000 investment that could be transferred to retirement, pay for the kids’ college, or continue to generate a 50,000 dollar interest payment. With this type of mindset, a life insurance benefit can both sustain your family long-term and change their lives down the line.
Get Expert Help
Don’t navigate life insurance alone, contact AmeriQuote Insurance in Fort Collins for expert help; our insurance professionals will lay out numerous life insurance companies and policies for you to choose from, allowing you to pay exactly what you want for what you need.