Presented by Will Armfield AAMS®, AIF®, CRPC®
Life Insurance as part of a financial plan
When implementing a financial plan, it can be tempting to only focus on the most likely outcomes, such as retirement or saving for children’s education. Saving towards long-term goals for you and your family are certainly a priority, but not at the expense of protecting your family should something happen to you.
Life insurance can be an important part of protecting the goals you have for your family. If something were to happen to you, would your family be able to live at the same living standard without your income? Would they be able to meet the goals you wanted to achieve for them?
Often times life insurance is thought of as only needed to cover debt and burial expenses. While those are certainly reasons to have life insurance, those are typically smaller sources of need. The major need is often income replacement should something happen to you during your earning years. Life insurance coverage needs are typically highest in a family’s early years when children are young, debt is at its highest, and the income of the earner(s) in the family is rising.
Review the plan
While protecting your family’s financial plan is important, reviewing it regularly is of equal importance. One constant throughout our lives is…change. When creating a financial plan, we often discuss the importance of reviewing it, and keeping your advisor up to date about changes in your life and changes to your goals. This also applies to life insurance.
Your coverage needs may change as you continue to pay down debt, save towards your goals, and get closer to retirement. However, some needs may rise as a family’s standard of living typically increases with time, while many of the previously mentioned needs decrease.
If you currently have life insurance, or are reviewing your current plan, the easiest most productive step you can take is reviewing your current beneficiaries on policies, accounts, etc. They are sometimes overlooked or misunderstood. Sometimes clients change their wills and assume that those documents will serve as the definitive answer as to who your beneficiaries are.
However, an account with a named beneficiary, supersedes a will and ultimately determines where the asset goes regardless of what the will states. Life insurance policies, IRA’s, T.O.D. (Transfer on death), and P.O.D. (Payable on death) accounts are some examples of where you will see named beneficiaries. Also, be sure to check qualified plans like employer retirement plans and life insurance through your employer.
The stories of ex-spouses receiving inheritance instead of the current spouse are the examples most used to motivate clients to check their beneficiaries often. Other examples include clients getting married and forgetting to change the beneficiary from their siblings or parents to their spouse or forgetting to add children that weren’t born when the policy was taken out.
Whether you currently have a financial plan or not, life insurance is something you should discuss with your financial advisor to see if it should be included in a plan to help you protect your family. Reviewing that plan regularly is recommended as life events changes your circumstances, and at the very least checking beneficiaries is an easy step you can take today to be sure your wishes would be implemented.
Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Will Armfield is a financial advisor located at Blakely Financial, Inc., 1022 Hutton Ln., Suite 109, High Point, NC 27262. He offers securities and advisory services as a Registered Representative and Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (336) 885-2530 or at firstname.lastname@example.org
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