Why life insurance should be the first step in financial planning

In the wake of increasing inflation, shift to nuclear families and change in lifestyle patterns, life insurance assumes vital importance.

It is paramount for every individual to first adequately insure his life for the financial security of his/her dependants and then proceed to address other aspects of financial planning.

Financial planning is a dynamic process that involves charting an individual's financial goals and longterm objectives in conjunction with ways and means of achieving those long-term goals and objectives.

This includes elements of protection, wealth creation, planning for contingencies and emergencies as well as planning for specific milestones in life.
Importantly, an individual's financial plan should be reviewed to be in sync with his different life stages and the various requirements that are specific to a certain stage in life.

Changing circumstances like marriage, purchase of a house, child's education mandate that the financial plan evolves to meet these objectives within the given timeline.

Today, an individual has an array of options to choose from when s/he starts financial planning. It is observed that people tend to focus on the 'wealth creation' aspect of financial planning and the 'protection' element often gets compromised or neglected.

While the loss of life of the family's bread-winner is irreplaceable, being adequately insured guarantees that the dependents are provided with the much-needed funds to be financially independent and largely keeps the family's financial plans on track without having to compromise on their standard of living.
This aspect of protection is unique to life insurance and hence it should be a key ingredient in an individual's financial plan.

As a risk-management tool, the importance of adequate life insurance in an individual's financial plan cannot be over emphasised. The relevance of life insurance as a longterm protection-cum-savings tool also comes from its primary feature of it being a need-based financial instrument that helps one meet every life stage need.

It provides the much needed peace of mind and at times actually stimulates enhanced risktaking ability of the individual. Every individual needs to asses his or her life insurance needs depending on an assortment of factors.

Life insurance requirements need to be scientifically assessed depending on the life stage at which the individual is along with current liabilities, expectation of future liabilities, number of dependents, financial goals, life style etc.

Money Matters: How Much Life Insurance Do You Need?

Whether you're married or single, a parent, or without children, life insurance can play a key role in your financial plan. But millions of Americans have no life insurance coverage, and many may not have enough.

Appreciating the importance of having adequate life insurance is one step; assessing your own unique needs is another.

As a starting point, determine your net earnings after taxes as well as your routine living expenses. Other factors to include in your calculations are:

Any outstanding debt that you owe, such as a mortgage or education loans
Future college expenses for your children
Funeral and other uninsured medical costs
How much your surviving spouse would need to adequately fund a retirement nest egg

As a general rule, you may want life insurance to cover these expenses. While ensuring the financial security of loved ones is an important use of life insurance, there are other uses. One example is as part of an estate planning strategy designed to pass more wealth to future generations. Another might be to fund a special needs trust to provide continued care to a relative after you are gone.

Once you have an idea of the amount of coverage you need, the next step is to evaluate the type of policy that is appropriate for you. Policies can be term or permanent life. Term life is basic coverage and less expensive. A term policy provides coverage for a predetermined period of time. Premiums can increase at the end of the term and can become extremely expensive. Term policies build no cash value and benefits are only paid if you die.

Permanent life insurance combines a death benefit with a tax-deferred savings component. With permanent life insurance, as long as you continue to pay the premiums, you are able to lock in coverage at a level premium rate for the life of the contract. Part of that premium accrues as a tax-deferred cash value. Borrowing from the value may be permitted.

Reviewing your coverage can be a daunting task. This is an area where a financial advisor can help you assess your need and fit it in with your entire financial plan.

Read more: http://www.wmur.com/money/27707150/detail.html#ixzz1L0uzIrGv

Hope In The Word — Life assurance vs. life insurance

Many people are thoughtful enough to take out a life insurance policy in order to provide an income or a source of revenue for their loved ones i case of their death.

Life insurance is a wonderful means of providing for those left behind who were dependent on you for all or a part of their living.

But many of these same people who are foresighted enough to take out life insurance to provide for others are shortsighted or careless when it comes to life assurance – or providing for their own soul at death.

While it is honorable and thoughtful to think of the financial security of those who depend on you, it is foolish to neglect your own eternal security. Jesus asked,

“For what shall it profit a man, if he shall gain the whole world, and lose his own soul? Or what shall a man give in exchange for his soul?” —Mark 8:36, 37. It would be a shame for one to provide for others and then themselves be left desolate for eternity.


The fact that one takes out a life insurance policy is an acknowledgment that death can come quickly and unexpectedly, “Whereas ye know not what shall be on the morrow. For what is your life? It is even a vapour, that appeareth for a little time, and then vanisheth away.” — James 4:14. One doesn’t even have to read the Bible to know that this is so, all one has to do is to read the daily newspaper or see the evening news on TV. News stories are filled with people dying unexpectedly at every age, young, old and in-between.

Jesus’ sacrifice on the cross made it possible for each one of us to have life assurance.

“I give unto them eternal life; and they shall never perish.” —John 10:28. And,

“He that heareth my word, and believeth on him that sent me, hath everlasting life, and shall not come into condemnation; but is passed from death unto life.” —John 5:24.

In order to take out a life insurance policy application must be made to an insurance company. The proposed insured must answer questions regarding his or her health.

Many times a physical exam is required. If the company finds a health problem it will charge a higher premium or decline to insure the person for whom the insurance is requested.

Insurance underwriters can be very selective in issuing a life insurance policy – only qualified applicants are approved.

How different this is from life assurance through Jesus Christ. All applicants are accepted by Him! Jesus said, “Him that cometh to me I will in no wise cast out.”—John 6:37.

The Bible assures us that this invitation is open to all, “For God so loved the world that he gave his only begotten Son that whosoever believeth on him should not perish, but have everlasting life.” —John 3:16.

The form of application is simple: “That if thou shalt confess with thy mouth the Lord Jesus, and shalt believe in thine heart that God hath raised him from the dead, thou shalt be saved.”

For with the heart man believeth unto righteousness, and with the mouth confession is made unto salvation. . . for whosoever shall call upon the name of the Lord shall be saved.” —Rom. 10:9,10,13.

Hope in the Word is written by Pastor Roy Delia of New Hope Baptist Church, Ontario. He can be reached in care of the Argus Observer, 1160 S.W. Fourth St., Ontario, OR 97914. The views and opinions expressed in this column are not necessarily those of the Argus Observer

Agents Who Play It "Safe," Failing Their Clients

A letter to the editor I just sent to an insurance publication...



I am reviewing insurance for a client. The agent's renewal review for

last year includes a statement that they never recommend limits of

coverage.



Really?



What exactly is your job then? Are you a clerk for the insurance

companies? "Here is what we can offer. Buy what you want." It's the

big-box approach to insurance service! Why exactly do people buy

insurance from you?



This comes from the world of errors-and-omissions-loss-prevention, a

pervasive cult that insists that everything an agent does must foil

the perverse suit-happy public.



Take no risks - offer no advice, is the mantra.



Horse-hockey! Insurance buyers need informed advice and counsel. The

world of insurance is complicated and complex. It is the agent's job

to stand up and advise the client. Why else would they need you?



While you are at it - remove the stupid message from your voicemail.

"Coverage cannot be bound or amended using a voice mail system." Show

me one case where a customer successfully sued an agent because a

voicemail message included a coverage change, and I will donate $100

to the Red Cross in your name.



Pablum for the mindless insurance lemming.