On a list of things that could be classified as “widely known, but barely understood,” Life Insurance would rank quite high. As a concept, it’s something that every living American adult is surely aware of in some capacity—through a national ad campaign, an acquaintance, a nice building somewhere in their town—but past that level of awareness, the information gap tends to be quite large.
Among the many uncertainties—whole or term, 20 or 30 years, which riders—they all tend to boil down to one primary question: “How much do I need?”
While the answer to this question tends to always be some form of, “it’s complicated,” Tom Arbaugh of Farm Bureau Insurance used his presentation time today to provide us all with a wonderful tool for simplifying this thought process and helping to guide his clients toward coverage levels that are both adequate, and comfortable for their budgets.
Keeping everything as intuitive and simple as possible, Tom’s tool follows a straightforward acronym for his trade – L.I.F.E.
While recognizing that every situation is different, it provides some good general rules for outlining probable insurance needs:
L – Liabilities
What mortgage balance is outstanding?
What other outstanding loans or debts do you carry that someone else could be liable for?
I – Income
What is your income? Often, people want to be covered for around 10 years worth.
F – Funeral Expenses
Your own plan will affect this, but can be as high as $20,000.
E – Education
What outstanding student loans does the family carry?
What forward-looking educational costs are there to plan for?
These are all key factors that fit the model, but other factors to consider also include:
Is there any insurance in place currently? How much?
How long until planned retirement?
How many dependents do you have?
Are there additional businesses or properties to consider?
And lastly—what is it that you want your insurance to accomplish toward each of these protections?
As this series of questions illustrates—every situation is different, and therefore it’s critical to have the right agent as your guide. Connect with Tom today for help determining the perfect coverage-level for you.
To connect with local professionals and hear more great presentations like Tom’s, visit us next week, and become a member to eventually deliver one of your own!
