Protect Your Future With Financial Planning
People don't plan to fail, they fail to plan!
We are happy to assist our valued customers in planning their future and ensuring their families' safety. Our programs are designed to protect their most valuable asset, their ability to earn an income!
Whether you live to old age, die too young, become disabled, or live too long, our insurance programs protect your family and assets.
In order to provide for your family and to buy a car, you need to be able to earn an income.
We offer retirement programs, such as IRA's, Annuities, 401K's, pension plans, and permanent life insurance to make sure you have financial security if you live a long time.
Should you die too young, our life insurance programs protect your family from financial ruin.
You and your family are protected from financial hardship by our disability income policies.
Financial Needs Analysis
You can use a Financial Needs Analysis to determine how to plan for your future and that of your family. We need to at least insure our home and the liability that comes with it. We also need to insure our auto(s) and our families for medical needs, as these exposures could wipe out our income if something significant happens, such as an accident or illness. For these exposures, we recommend high limits. Next, we need to establish how much income you value and what level of living you need to maintain for you and your family.
Life Insurance Planning
We feel it is too simplistic for most individuals to use an eight-to-ten factor to determine their life insurance needs. Following is a more direct approach to determining one's life insurance needs when protecting their family. First, we review the debts that need to be paid off so our family is not affected by hardships like paying final expenses, the mortgage, or an auto loan, or liquidating those assets. In addition, we consider future family needs, such as covering the cost of education or emergency expenses. Next, we need to determine if you need to replace your lost income in order to maintain your standard of living.
| Debts | |
|---|---|
| Mortgage Balance | $185,000 |
| Loan | 12,000 |
| Credit Cards | 5,500 |
| Unpaid Taxes | 2,500 |
| Other debts and final expenses | 15,000 |
| Total Current Obligations | 220,000 |
| Future Expenses | |
| Education Expenses (2 children at $40K each?) | 80,000 |
| Emergency Fund | 20,000 |
| Total Future Obligations | 100,000 |
| Income Replacement | 600,000 |
Disability Income Planning
A disability lasting longer than 180 days is eight times more likely than death at age 30 and five times more likely at age 50.
Disability income insurance is the only way to protect your standard of living.
Typically, the full purchase option is 70% of your current income because benefits are not taxable and the insurance company does not want you to be able to make more money on disability than you could work. Nevertheless, you need to decide how much coverage you need and for how long. Your occupation and income will determine the amount you need. It is recommended to replace at least 50% and up to 70% of your monthly income with DI coverage for as long as the benefit period allows. The waiting period before any benefit payments can also be selected, usually 60, 90, or 180 days. As a result, premiums will vary accordingly.
We have a plan to ensure our families and ourselves are protected in the event of premature death or disability.
Retirement Planning
Next, we will make sure we have the cash and assets to maintain our standard of living even if we live too long.
It should specify the number of employees needed to generate the income required to maintain the standard you choose. In this case, we look at a desired monthly income, so if we anticipate earning a reasonable return of 4% and need an annuity of $1,200,000, we would need an annuity of $4000 per month after retiring. You may want to consider other sources of income, such as social security, while planning for your retirement, but we have to plan to take care of ourselves because there are no guarantees in life.
IRAs, 401Ks, pensions, and other tax-deductible investments are recommended. As interest accumulations are at least tax-deferred, life insurance is one of the best accumulation programs. Capital gains are at least tax-free until they are sold.
As shown below, early efforts to save have a great impact on the results. You must set aside the listed monthly investment at the age of 65 in order to accumulate $500,000 at 4% interest.
| Age | Contribution |
|---|---|
| 25 | $200 |
| 30 | 300 |
| 35 | 500 |
| 40 | 800 |
| 45 | 1200 |
| 50 | 1800 |
| 55 | 3000 |
| 60 | 6000 |
As we can see, early contributions are crucial for eliminating the necessity of later contributions that may be impossible.
Long Term Care Planning
In addition, we need to examine the possibility of needing assistance with in-home health care in a long-term care facility. Government benefits are only available if you meet specific financial criteria, and most of us will have to sell our assets to qualify. Your assets will not be diverted to pay for your care in or out of a nursing home with the help of an excellent long-term care policy. In this case, too, early planning is crucial as the costs of these plans skyrocket as you get older. Our first step is to determine a benefit we might need for a potential period of time.
Costs for care facilities today range from just over $100 per day to upwards of $300 per day in some of the nicer facilities. It's an average of $73000 per year, which can ruin a good retirement plan in just a few years.
Following is an example of the costs at various ages and benefit periods for a $200 per day benefit plan with a 90 day waiting period.
| Age | 2 year | 5 year | Lifetime |
|---|---|---|---|
| 45 | 600.00 | 900.00 | 1200.00 |
| 50 | 1200.00 | 1500.00 | 1800.00 |
| 55 | 1600.00 | 2500.00 | 3600.00 |
| 60 | 2400.00 | 3600.00 | 4800.00 |
| 65 | 3000.00 | 4200.00 | 6000.00 |
Planning ahead can help keep the costs down and the benefits high.
Need more information? Call us at (505) 888-8846 to speak with one of our experts.