Life Insurance Awareness Month | blog.firstffcu.com

For many people, life insurance is a key component of a comprehensive financial plan. Determining how much you need is a crucial step in ensuring financial security for your loved ones in the event of your passing. While there’s no one-size-fits-all answer and since September is Life Insurance Awareness Month, completing these planning tasks can help you figure out the right amount of coverage for your needs.

Assess your financial obligations. Determining your life insurance needs starts with evaluating your current financial obligations. Consider your outstanding debts, such as mortgage payments, car loans, credit card balances, and student loans. Additionally, factor in future financial needs like college tuition for your children.

Calculate income replacement. Determine how much income your family would need to maintain their standard of living if you were no longer around. A good rule of thumb is to multiply your annual income by the number of years your dependents would require financial support. Individual circumstances will vary, depending on the current age(s) of your dependents. If you’re just starting a family, for example, you might want to consider 20‒25 years multiplied by your annual income.

Consider your spouse or partner’s income. If your spouse or partner contributes to your household income, consider how their income would change in your absence. For example, they may need to reduce their working hours to take care of children or other family matters during this transition period. Life insurance can help replace their lost income or provide financial assistance for childcare if needed.

Evaluate existing assets and savings. Take stock of any existing assets and savings that could be used to cover expenses in your absence. This includes savings accounts, investment portfolios, retirement accounts and any other liquid assets. Subtract these from your financial obligations to determine the additional coverage needed.

Account for inflation in future expenses. As the past few years have shown, the cost of living will increase over time due to inflation. Make sure to factor it in when you project future expenses such as college tuition, healthcare costs and other living expenses when calculating your life insurance needs.

Consider special circumstances. If you have dependents with special needs or unique circumstances, such as a disabled child or elderly parent, you may require additional coverage to ensure their ongoing care and support.

Review regularly. Life insurance needs can change over time because of factors like marriage, childbirth, career advancements or changes in financial obligations. Regularly review your coverage to ensure it aligns with your current circumstances and adjust as needed.

Questions about this topic? Contact First Financial’s Investment & Retirement Center by calling 732.312.1534. You can also email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.
LPL Financial and its advisors are only offering educational services and cannot offer participants investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advisory services must be obtained on your own separate from this educational material.

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©2024 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.

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Discussing life insurance can be a sensitive topic — after all, talking about death is never comfortable. But life insurance is an important financial product, especially if you support others or have substantial assets that you wish to transfer to future generations.

Choosing a life insurance plan is anything but straightforward, though. There are many types of insurance and features for you to consider. Here’s a quick overview of the most popular types.

The most popular type is term insurance, which often is the least expensive. These policies are written for a specific period of time — one to 30 years, for instance. You can renew them once the term expires, but the price may increase. If you wish to lock in the premium, you’ll select what’s called a level term policy.

A declining balance term insurance policy is used to protect your mortgage principal, and its benefits are paid only if you die during the policy’s term, which aligns with your mortgage amortization. Once you pay off your mortgage, the policy expires and has no value – unless you choose to renew it.

Whole life features permanent protection with a savings element. You can lock in a premium rate, and part of the premium accrues a cash value. As the savings amount increases, you can even borrow up to 90% of the policy’s cash value tax-free.

Next is universal life, which is like whole life but potentially accrues higher savings. You can change the premium amount and withdraw cash, and even possibly change the face value of the policy. These can offer a guaranteed return on cash value, too.

A variable life policy generally features a fixed premium and a flexible cash value policy. In fact, you can invest the cash in a variety of investment types. However, keep in mind that the cash value and death benefit can fluctuate, based on the performance of your investments.

Finally, universal variable life is considered an “aggressive” policy. While similar to variable life, there is no guarantee beyond the original face value death benefit. As such, they are more common with wealthy buyers who can withstand the risks.

For questions about navigating the many complexities of life insurance, including recommended coverage amounts, consult your financial professional. You can also email the financial professionals in the First Financial Investment & Retirement Center at mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com.

Securities and insurance offered through LPL or its affiliates are:

The cost and availability of Life Insurance depend on many factors such as age, health and amount of insurance purchased. In addition to premiums, there are contract limitations, fees, exclusions, reductions of benefits, and charges associated with policy. And if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

Variable Universal Life Insurance/Variable Life Insurance policies are subject to substantial fees and charges.

Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy’s account value and death benefit. Withdrawals are taxed only to the extent that they exceed the policy owner’s cost basis in the policy and usually loans are free from current Federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding.

Policy values will fluctuate and are subject to market risk and to possible loss of principal.

Any life insurance guarantees are contingent upon the claims-paying ability of the issuing company.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

This material was prepared by LPL Financial, LLC

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