4 steps to get your life insurance on track

4 steps to get your life insurance on track


It happens to all of us. That’s true whether you’re looking for chores at work or at home. I dare say we’ve all reached the end of the day and asked ourselves, ‘What happened? I didn’t achieve anything on my list.”

Unfortunately, this phenomenon can negatively affect your family’s finances, as well as your productivity at work or at home.

A good example is life insurance. Discussions and plans related to this touchy subject are easily distracted due to its perceived complexity or a general uneasiness about the subject. With that in mind, here’s an easy-to-implement, four-step process for your family to tackle life insurance.

1. Determine the correct amount of coverage

Begin and be aware of the end. Literally. Figuring out what you need, given your unique situation, if something happens to you or your significant other is an important step in making life insurance decisions for the family. Yes, it is likely that if this were the case, it would have a significant financial impact on your family either deceased by you. Things like paying off debt, paying off last-minute expenses, raising children and then sending them off to college, replacing lost income, and giving you or your spouse time to bounce back if something happens to the other is, can come with a significant price tag.

There are online calculators that can help you figure out what you need. The VA has one. There is an easy-to-use calculator on lifehappens.org. And of course, an insurance agent could help you find the answer.

2. Analyze what you have.

Once you know what you need, it’s time to compare that to what you have. First, for those in uniform, you probably have $400,000 of Servicemembers’ Group Life Insurance (SGLI). Spouses can have family SGLI insurance up to $100,000. Non-military employers also typically offer group insurance. In or out of the military, you can see how changing jobs could affect your life insurance coverage. For this reason, it can make sense to diversify the sources of your life insurance coverage.

And that’s where things can get more complicated. You must choose the type of coverage. What is the right type of insurance? In general, there are two broad types of coverage, term and perpetual.

Temporary needs—those that will disappear, like mortgages and raising children—are well covered by term life insurance. For example, if you have a couple of children aged 3 and 5, you could take out a 20-year term policy (this type of policy has a level premium and death benefit during the 20-year period) that covers up to to you children are traveling alone – knock on wood.

On the other hand, for a policy that you want to have “forever”, a permanent policy may make sense. For example, there may be an amount of money you want to give to your spouse or family when you are away, or a life insurance policy that is part of complex estate plans, or a special needs situation.

Now that you’ve identified what you need and checked out what you have, it’s time to…

3. Fill in the blanks

If you’ve got the numbers together and there are no gaps – either in quantity or in source – your work is done for now. On the other hand, if you need extra protection, it’s time to shop.

A few things to keep in mind: First, a large coverage requirement does not necessarily mean large premium payments. Life insurance can be surprisingly cheap. Second, as I mentioned earlier, match the type of coverage you choose with the reason for the coverage. It’s finally getting easier and more convenient to take out life insurance. Digital applications, automated underwriting as well as technology and data make life insurance underwriting easier and faster. Don’t let the fear of the process distract you.

4. Rinse, wash and repeat

Being able to set a strategy or process and forget about it is nice. Unfortunately, life insurance does not lend itself to this type of approach. A new baby, a new house, a divorce, or a job change are examples of everyday life events that can change your life insurance situation. Keep that in mind, and when things like this happen, make sure you reconsider your life insurance coverage with these simple steps.

Get the coverage your family needs

FSGLI, TSGLI, VGLI, SGLI… the long list of acronyms and minimum requirements may not be enough to cover your family’s needs. Explore life insurance options with our free tool that compares rates and matches you with the coverage you want.

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