The meeting began innocently enough.
I asked, “What are the most important topics we want to cover in our time together today?”
Han (48) and family breadwinner: “I’m all set on life insurance, but I’d like to discuss (A, B, & C).”
In my fifteen years of financial planning experience, my instincts told me that life insurance would be a topic that would come up again.
So, together, we began navigating through the financial planning process with his wife, Leia.
We went through their monthly income, expenses, emergency funds, upcoming major purchases, and investments – we were making real headway, productively navigating their financial lives, and making notes for their future plan, it was a pretty seamless meeting…
Then a speedbump, we found our way to the insurance portion of building their financial plan:
Q: “Okay, you said you were all set on life insurance. How much life insurance do you have, Han?”
A: “I have enough to pay off the mortgage on the house.”
The Problem
☐ Leia is a homeworker and does not earn an income.
☐ While it would be great that the house would be paid off, the family still has lifestyle expenses of approximately $7,000/month.
☐ We don’t like to do this, but it needs to be a real conversation: “Han and Leia, God forbid, but what if something happened to Han and that paycheck disappeared tomorrow? I need you to picture what that might look like for you, Leia, financially.”
This is when folks usually wake up to the reality of the “What ifs,” and Han and Leia were no different.
Next Steps
The Good News – Han is a pillar of health and can qualify for additional life insurance.
☐ We increased Han’s life insurance in his group retirement plan to the maximum amount.
☐ We solved for how much additional life insurance benefit the family would need if Han were to pass away today.
We can’t stress this enough: Choosing an appropriate amount of coverage is critically important to the long-term protection of your family.
It’s essential to ensure that you have adequate life insurance coverage to pay off all outstanding debt obligations and future educational expenses AND leave a pool of money to maintain your family’s lifestyle.
We don’t arbitrarily choose a number like $500,000 or $1,000,000.
We guide all families through a process to determine precisely how much life insurance you need. No guesswork. No rules of thumb.
Believe it or not, sometimes the answer is that you might not need life insurance (even though you may want it).
All this said, if you do need life insurance – your family depends on you getting the coverage amount correct.
If you or someone you’re close to could use help aligning their finances and establishing a financial plan, please reach out to us, we’re accepting new clients and eager to help.
Cheers,
Nic
