I'm sure most of us have a story about a loved one who passed on suddenly and the hole that it left in our heart. The pain of such a loss is enormous; but couple that with not having life insurance and you may be faced with overwhelming odds for recovery both emotionally and financially.
This is exactly what happened to some very dear friends of mine when unexpectedly their mother passed away. The family was of course heartbroken but their greatest immediate challenge was the management of their family business. You see- Their mother was the backbone of the business, working day and night to keep it afloat. Without her the business failed within one year and the family has never fully recovered even some twenty years later.
It took me a long time to fully grasp the depth of my friends troubles. However, it took me only moments to understand what would have helped them financially- the proper life insurance coverage.
The friends I mentioned above are some of the most wonderful and giving people I have ever met. I did not get the chance to meet their mother but I know she was every bit as kind and generous as her children. I can say without a doubt that if she knew her future, she would have done everything within her power to ensure her children didn't suffer financially after her passing.
My friends' experience prompted my husband and I to start asking ourselves some questions about how to guard against such a catasrophic loss. Over time I've developed six core questions that we review about ever two years. Your ability to answer these questions, without hesitation, will absolutely guard your family against the financial upheaval of losing you. Consequently, you may learn some new ways you can add to the creation of your own family's financial legacy.
Starting from the bottom up:
6. Has Your Debt Increased?
How different is your debt today compared to the day you first put your life insurance into place?
5. Has Your Family Expanded?
Have you had any children or did you take on caring for an older loved one or two, like your parents? Do you worry about how to pay for your children's higher education?
4. If Your Term Policy is Nearing Maturity Don't You Still Have a Need for Life Insurance?
If you own a term policy that is getting near maturity, it may be time to evaluate whether you'll still have a life insurance need at the end of the term. Odds are you will! Is your home paid off or have you taken out any equity for home repairs or other expenses (here is where your mortgage comes back in)? Often we can forget to adjust our life insurance when we increase the amount or extend the life of our mortgage. Don’t forget about any rental properties. Have any of those lying around?
3. Are You on Track for Meeting Your Retirement Needs?
Are you absolutely certain that your long term financial needs are covered? Can you say without a doubt that you will be financially independent through retirement, even if you live to be past 85!? Cash value life insurance plans are the ONLY financial tools that will allow you to fund at almost any level, build equity in a tax deferred account, and to withdraw these funds tax free with little or no loan fees. Your cash value is your money tax free! Now, ask yourself the following question- Will income tax rates be higher or lower when you retire? The answer to that question should make my point crystal clear.
2. Will You Leave Behind a Financial Legacy That Will Continue to do Good in the World?
Do you want to leave a financial legacy for your children, grandchildren, other loved ones, charities and/or other philanthropic endeavors? If so, life insurance is a perfect tool!
1. Are you 100 Percent Confident in Your Ability to Answer Questions 6 through 2?
The number one reason why you should review your life insurance at least every two years is to ensure that you continually explore and are able to answer, without hesitation, questions 2 through 6! If you can answer without hesitation, then A) Pat yourself on the back and I’ll see you again in 2 years, or B) Pat yourself on the back for taking a look at what your needs really are, and make sure you start to build a financial legacy that ensures you will not have to wonder again if you have enough life insurance!
That should be enough to get you all thinking. I look forward to your questions, comments, suggestions, feedback and to the possibility of having the privilege of sitting down with you to ponder these questions face-to-face.
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