life insurance investment strategy
The idea that you may not need life insurance is anathema to most life insurance agents. But as a Certified Financial Planner, which is also an insurance agent for life, I have a different point of view. There are times when you may not need life insurance.
For me, there are three reasons to have this insurance. You should be used to provide a way to replace the breadwinner's income in case of premature death, as a means to pay future property taxes for pennies dollar, or employ some interesting special situation strategies. Otherwise, you may not need life insurance and could better use that money to finance items of highest priority as Insurance Long Term Care.
Using life insurance to replace income of the household head for years before winning the Retirement is a practical necessity, especially when they have kids. Unfortunately, many people still fail to protect their loved ones in this way. Due to our life insurance policies, my wife and I take great comfort knowing that our family would be well served neither should disappear.
If you not have enough insurance to replace your income if you die, you could be putting an enormous burden on his family. For single parents is even more important!
A simple rule to determine whether you have enough insurance is to divide your salary by .05. For example, if you earn $ 50,000 a year, you should have approximately $ 1,000,000 in life insurance. In most situations, I recommend 10, 20 or 30 years of long-term insurance versus permanent insurance. Get the duration the mandate to take you to retirement age.
Once you retire may no longer need this insurance. If you have accumulated enough assets to provide comfort throughout his life, then life insurance is not needed for income replacement. Do not cancel the policy, however, though, because you may have that for other reasons.
An individual can pass $ 2 million to heirs free of federal estate tax. If you have successfully accumulated more than this, then it is possible you have life insurance to pay future property taxes.
Even with the recent changes in property tax laws, many still find themselves facing hundreds or thousands of dollars in taxes to property to his death. With proper planning, married couples are able to spend $ 4 million to his heirs in 2006 without incurring on Federal property taxes. Unfortunately, few married couples have adequate plans in place and end up losing an exemption that results in the reduction of that amount a $ 2 million.
Life insurance is a wonderful way to pay death taxes without eating on the farm itself.
This is particularly true when a large percentage of an estate is tied to illiquid assets such as real estate. In such cases, these goods must be sold to pay taxes.
With proper use of this insurance you can avoid these situations altogether, and so do you pay your taxes for pennies on the dollar. If your property is less, may you do not need life insurance to help cover future property taxes.
The third use of insurance is for special situation strategies. There are strategies only ones that will dramatically increase the amount of support that can provide your favorite charitable cause or provide a financial safety net for your loved ones for generations.
Even those with limited resources can provide literally millions of dollars to worthy causes, while the transmission of a legacy to give future generations. Very few are aware of these strategies.
Failure to meet one of these situations may no longer need life insurance. Do not take this decision lightly, however, especially if your health has declined.
Also, depending on your age and health, you can get more for sale of its policy instead of canceling it. Consult a qualified, impartial professional before cancellation of their policies to make sure.
About the Author:
Nationally-syndicated financial columnist and Certified Financial Planner Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He will answer your financial question FREE at http://www.guardingyourwealth.net/
Article Source: ArticlesBase.com – Insurance: Life Insurance, Too Much, Too Little, Or Just Right?
