What’s Coming Down the Road?
Making the Best Plan for Tomorrow Requires Asking the Right Questions Today
By Alicia Wanek | Staff Writer
I used to second-guess myself all the time. Whether when I drove off the lot, signed the last document, or shook someone’s hand, I started to worry if I had made the right choice. But I’ve finally learned that if I’ve done my research and asked myself all the right questions first, I can walk away with confidence. The decision to make sure your loved ones are taken care of after you’re gone certainly qualifies as an important life decision. But if you have someone to ask the right questions, you can have the peace of mind to know that your policy will be the right one for you. Bobby Davidson, local independent agent, offers what he calls a “360 review” to examine your individual needs full circle. He suggests the following “Top 10 Questions” as you determine what type of policy – or policies – you need.
- Are you a buyer or a renter?
The big question here is whether you need a permanent policy or a term policy. Generally, permanent policies are better and accrue a cash value over time. They are also totally protected from creditors and generally include a tax-free death benefit. However, “a term policy means just what the name says,” Bobby explains. It can cover you for a certain period of time, akin to a “rental.” These policies are usually less expensive, so if you just need extra coverage for a while, such as when your children are in college, this might be a fit for you. “If you can’t afford a permanent policy, at least get something in place by purchasing a term policy,” Bobby suggests. Insurance costs more as you get older, and Bobby says clients always wish they had bought more when they were younger.
- Should I guarantee my child’s insurability by purchasing a plan for them?
Life insurance for children may not seem important now, but purchasing a plan for them early insures that they have access to life insurance if, perish the thought, they were to get an illness that would make them uninsurable later.
- How much money do I have right now?
Consider your income, savings, and amount you have invested. This can help you decide how large a policy you would need to supplement what you already have.
- How would my loved ones be taken care of financially if I wasn’t around?
Ask yourself, “Am I leaving them in a good situation?” Bobby suggests. What other means of financial support would they have?
- What would it cost to raise and educate my children?
Consider everything from daily expenses to caregivers to college education. It adds up quickly.
- What amount does my spouse need?
Look at whether your partner works and whether they would continue to do so if something happened to you. Bobby asks, “Do you want them to maintain your current lifestyle?”
- How much might I inherit?
“For many of us, this amount would not be enough to influence our life insurance purchases,” Bobby says, but if you do stand to inherit a large amount, this is a factor. There also may need to be a trust established to avoid estate taxes.
- What’s the “time value” of money?
Consider this: “Do you think $1 million is worth the same now as it was in 1970? How about 30 years from now?” Bobby says it will cost more to cover expenses like rent, food and tuition in the future, so you need to consider inflation.
- What agent can help me find the right
policy?
Go to someone you trust. Make sure they can offer you options. An agent like Bobby who can help you evaluate your options is always a good choice.
- How have my circumstances changed?
It’s important to re-evaluate your needs at least every couple of years. You may need more or less insurance depending on your personal situation.
For more information, contact your insurance agent or contact Bobby Davidson at 972.980.4884 for a complimentary 360 Review*.
* Statutes vary from state to state as to the amount of protection of life insurance (cash values and death benefits) and who must be named as beneficiary, etc.
The law of the specific state should be reviewed.
