There are many ways to determine how much life insurance may be appropriate to provide your family. One way is to focus on how much money would be necessary to replace your monthly income in the case of an unfortunate event. This allows you to determine how much your life insurance provides for those most important to you, by focusing on the total amount of coverage needed to provide income that your family could use monthly to supplement lost household income.
By providing your family with a monthly income in your absence, they may still be able to keep the lifestyle they have grown accustomed to and cover any other obligations your monthly income may now cover.
What is your monthly income?
How much of your income do you want to provide for your family in the event something happens to you?
How long would your family need this income in the event something happens to you?
Instructions for Life’s Choices Income Simplifier
Determine your monthly income, the amount you wish to protect and how many years you wish to protect it. For protected monthly
income levels and a duration of years protected other than what’s shown – we can develop a customized report.
Amount of Protected Monthly Income
Values in this table represent the present value of a future income stream and are based on a hypothetical rate of return of 4%. If the rate of return were higher or lower, a different value would result.
Section II | Insurance Portfolio Allocation
While determining the right amount of life insurance is a challenge for most people, deciding which type of policy can be even more confusing. In fact, half of American households (58 million) readily admit they currently don’t have adequate life insurance coverage – the highest level ever.
Some people feel they need life insurance for a certain period of time – just long enough to meet their responsibilities for those who depend on them. This is typically done with term insurance.
Others, however, recognize that owning some form of life insurance for their entire lives can provide them with added security and flexibility as they prepare for life’s responsibilities. This is typically done with permanent life insurance.
The Life’s Choices will present you with the opportunity to share your feelings and attitudes and provide you with guidance in choosing the appropriate type and amount of insurance. Many people find their objectives are best met with a combination of term insurance and permanent insurance.
0 Points = 100% Term
Clearly you’re concerned about those who depend on you; however, today you feel you want coverage for a limited time. Based on your answers, a term life insurance policy with the option of future conversion should be considered. The next section will help you understand which permanent policy you may want to consider converting to in the future.
1-2 Points = 75% Term / 25% Permanent
You recognize the importance of owning life insurance throughout your entire life; however, you also acknowledge that your biggest concern is protecting those who depend on you during your working years. Life insurance products with mostly term insurance and a small amount of permanent insurance should be considered based on your answers.
3-5 Points = 50% Term / 50% Permanent
Your answers show that you appreciate both the benefits of permanent and term insurance. Life insurance products consisting of equal amounts of term and permanent protection should be considered based on your answers.
6-7 Points = 25% Term / 75% Permanent
Protecting those who depend on you for your entire lifetime – regardless of how long you may live – is most important to you. Your preferences indicate that life insurance products consisting mostly of permanent insurance should be considered based on your answers.
8 Points = 100% Permanent
You want lifetime protection, to leave a legacy and protect your spouse’s retirement income. A permanent policy should be considered based on your answers.
Many companies offer term policies with guaranteed level premiums for a specific period of time. After the level premium period, the premiums increase significantly each year. During the level period you may be able to convert your term policy to a permanent policy with no additional medical questions or requirements.
Section III | Permanent Insurance Allocation
Many people find that owning some term insurance is an effective way to protect their families and others who depend on them, particularly for the short-term.
Many of these same people, however, also want the long-term protection and flexibility of permanent insurance but are unsure as to which type is most suitable for their situation.
The most appropriate type of permanent insurance for you is based on your preferences and attitudes toward a range of factors such as risk preference, flexibility, guarantees and your retirement and legacy objectives.
Life’s Choices will present you with the opportunity to share your feelings and attitudes, and provide you with the guidance regarding which product best suits your needs based on your situation. Your financial professional will help you understand the features and benefits of the options that are available.
Below 59 Points:
Your answers show that you favor guaranteed death benefit protection over the potential for cash value growth. You should discuss with your financial professional whether universal life insurance with secondary guarantees should be considered based on your situation.
Your answers show that you generally prefer guaranteed death benefit protection, yet you may want to consider a policy that has some element of cash value growth. Working with your financial professional, you should consider universal life or whole life insurance to determine what policy best fits your situation.
Your answers show that you prefer a policy that has both guaranteed death benefit protection as well as a guaranteed form of cash value growth. You should discuss with your financial professional how whole or universal life insurance should be considered based on your situation.
You said you would prefer a policy with the potential for cash value growth, yet you also may be unsure about taking risks with your policy
values. Working with your financial professional, you should consider either whole life or index universal life or maybe a combination of both. You can discuss the potential risks, benefits and crediting options available with index universal life policies to determine what crediting option is best for you and if it is right for your situation.
Over 72 Points:
You clearly prefer a policy that has cash value with the potential for growth associated with the stock market. Working with your financial professional, you should discuss the potential risk, benefits and crediting options available with an indexed universal life policy.
Contracts available in the market based on your answers above:
Can provide clients with an array of options. Some products are designed to offer a secondary death benefit guarantee with a return of premium, while others focus on cash accumulations.
Has guaranteed level premiums, guaranteed cash value and guaranteed death benefits. Whole life is also eligible to receive annual dividends (participating contracts). Dividends are not guaranteed, however, if paid they may increase the cash value and death benefits over time.
Indexed Universal Life
Premiums may be allocated to fixed account, one or more index strategies, or a combination of any of the available interest crediting strategies. Depending on the allocation, the policy holder can earn fixed interest or interest based upon the performance of the S&P 500® Index.