by lifeagent911 » Wed Mar 25, 2009 11:19 pm
I just wanted to give you some food for thought.
Let’s talk about an avg sale. The client wants to protect their love ones if/when something happens to them. Most clients only think about covering the cost of a funeral and paying off the house. Some of them even think about the kids going to college, but that is all.
But a lot of clients are not protecting their family members enough. They are not thinking about income.
Example. If a husband is making $120,000 a year. We need to also account of the loss of his income. Sure the house will be paid off and the cost of the funeral taken care of, but is that really enough? The answer is NO!!
The wife will now be without the husband’s income forever. She has grown accustom to her lifestyle and now the income is gone. Even if she is working also, the income that he was bring in is now gone.
The question is how many years income does she need until she either replaces his income or don’t need as much. The house is paid off now, but that only takes away the house payment. Nothing else. The rest of the bills still come in each month.
Again the problem is that a lot of agents and clients are only thinking paying off the house and paying for the funeral. This is a huge mistake.
You need to talk to your client about insuring the current income for a while also. When I got a policy on myself, I also included 5 years of my income at the time into the policy. I wanted to make sure she would at least have the same thing coming in for 5 years after I am gone and have the home paid off, the funeral taken care of and I also included some college money for the kids and a little more then what I thought she needed.
I’ve went back a couple of times since to make sure that I’m leaving her enough. Later down the road when the kids are gone and the house is paid off, and I’m still alive, I will go back and lower the face amount maybe.
I just want you to make sure the client is buying enough life insurance.
Let’s talk about an avg sale. The client wants to protect their love ones if/when something happens to them. Most clients only think about covering the cost of a funeral and paying off the house. Some of them even think about the kids going to college, but that is all.
But a lot of clients are not protecting their family members enough. They are not thinking about income.
Example. If a husband is making $120,000 a year. We need to also account of the loss of his income. Sure the house will be paid off and the cost of the funeral taken care of, but is that really enough? The answer is NO!!
The wife will now be without the husband’s income forever. She has grown accustom to her lifestyle and now the income is gone. Even if she is working also, the income that he was bring in is now gone.
The question is how many years income does she need until she either replaces his income or don’t need as much. The house is paid off now, but that only takes away the house payment. Nothing else. The rest of the bills still come in each month.
Again the problem is that a lot of agents and clients are only thinking paying off the house and paying for the funeral. This is a huge mistake.
You need to talk to your client about insuring the current income for a while also. When I got a policy on myself, I also included 5 years of my income at the time into the policy. I wanted to make sure she would at least have the same thing coming in for 5 years after I am gone and have the home paid off, the funeral taken care of and I also included some college money for the kids and a little more then what I thought she needed.
I’ve went back a couple of times since to make sure that I’m leaving her enough. Later down the road when the kids are gone and the house is paid off, and I’m still alive, I will go back and lower the face amount maybe.
I just want you to make sure the client is buying enough life insurance.
Posted: Thu Mar 26, 2009 11:46 am Post Subject:
You are absolutely right Life, we often ignore the importance of safeguarding against the loss of continuous income. We consider the lumpsum expenses that we would incur at the event of loss of the insured, but overlook the perpetual loss. Therefore, one should also take into consideration the future income loss and set the coverage amount accordingly.
~Jeremy
Posted: Thu Mar 26, 2009 03:28 pm Post Subject:
That is a good tip. Thanks for posting it. I would also suggest that people should consider the income lost if something bad would happened to them. I have learned some formula on how to compute for the total life insurance coverage a person should have.
For example a person is earning 5000 per month making the annual income of 60000. The annual rate of investment is 2%. The total coverage a person should have is 60000/.02=3000000.
If something bad would happened to the insured, the beneficiary would get 3000000 and invest it at a rate of 2% per year. Giving then an income of 60000 per year which is equivalent to the breadwinners annual income.
This is quite a good analysis but the question is how much would 3000000 coverage would cost? I think its quite expensive right?
For those people who don't have life insurance yet, it is always better to have even a small amount than having no insurance at all.
Posted: Fri Mar 27, 2009 08:15 am Post Subject:
lifeagent911 i agree with you on this aspect that one need to think beyond only home and FE.
person should give a valid consideration about the fact they are going to loose a big income once the earning member looses the life.
so i think in this particular scenario one must go for the plain vanilla insurance no saving scheme.....only plain insurance product will solve the whole worry about the matter.
so i think person should opt for the term insurance which is light on pocket as well as sufficient for the all the above considerations.
Posted: Wed Apr 15, 2009 12:26 pm Post Subject:
You are absolutely right Life, we often ignore the importance of safeguarding against the loss of continuous income
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