Retirement Mathematics 101: How Much Will You Need?

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Retirement Mathematics 101: How Much Will You Need?

Have you ever wondered how someone could actually retire?

The main difference between a strictly unemployed person and a retiree: A retiree has replaced their income somehow. This can be done in a variety of ways including (but not limited to):

  • Saving up a lump sum of money and withdrawing from it regularly
  • Receiving a pension from the company you worked for or from the government
  • Or an annuity you purchased that pays out an amount regularly

For the example below, let’s assume you don’t have a pension from your company nor benefits from the government. In this scenario, your retirement would be 100% dependent on your savings.

The amount you require to successfully retire is dependent on two main factors:

  1. The annual income you desire during retirement
  2. The length of retirement

To keep things simple, say you want to retire at 65 years old with the same retirement income per year as your pre-retirement income per year – $50,000. According to the World Bank, the average life expectancy in the US is 79 (as of 2015).¹ Let’s split the difference and call it 80 for our example which means we should plan for income for a minimum of 15 years. (For our purposes here we’re going to disregard the impact of inflation and taxes to keep our math simple.) With that in mind, this would be the minimum amount we would need saved up by age 60:

  • $50,000 x 15 years = $750,000

There it is: to retire with a $50,000 annual income for 15 years, you’d need to save $750,000. The next challenge is to figure out how to get to that number (if you’re not already there) the most efficient way you can. The more time you have, the easier it can be to get to that number since you have more time for contributions and account growth.

If this number seems daunting to you, you’re not alone. The mean savings amount for American families with members between 56-61 is $163,577² - nearly half a million dollars off our theoretical retirement number. Using these actual savings numbers, even if you decided to live a thriftier lifestyle of $20,000 or $30,000 per year, that would mean you could retire for 8-9 years max!

All of this info may be hard to hear the first time, but it’s the first real step to preparing for your retirement. Knowing your number gives you an idea about where you want to go. After that, it’s figuring out a path to that destination. If retirement is one of the goals you’d like to pursue, let’s get together and figure out a course to get you there – no math degree required!

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Sources: ¹ “Life expectancy at birth, total (years).” The World Bank, 2018, http://bit.ly/2I8w4gk. ² Elkins, Kathleen. “Here’s how much the average family in their 50s has saved for retirement.” CNBC, http://cnb.cx/2FX0Ckx.

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Improve Your Love Life... With a Financial Strategy?

Who knew that having a financial strategy in place has the potential to improve your love life?

Here’s the proof: 84% of Americans think a romantic relationship is not only stronger but also more satisfying when it’s financially stable.*

So what does it mean to be financially stable and ready for the Big Financial Talk?

Here’s a simple 5-point checklist to let you know if you’re on the right track:

  1. You aren’t worried about your financial situation.
  2. You know how to budget and are debt-free.
  3. You pay bills on time – better yet, you pay bills ahead of time.
  4. You have adequate insurance coverage in case of trouble.
  5. You’re saving enough for retirement.

If you didn’t answer ‘yes’ to all of these, don’t worry! Chances are this checklist won’t come up on the first date – or the second or the third. But when you have the “money talk” with someone you’ve been seeing for a while, wouldn’t it be great to know that you bring your own financial stability to the relationship? It’s clearly a bonus – Remember the stats up there?

Everyone could use a little help on their way to financial stability and independence. Contact me today, and together we can work on a strategy that could strengthen your peace of mind – and perhaps your love life!

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Source: “Yet Another Reason to Get Your Financial House in Order: Americans Say Financial Stability Makes for a Better Love Life.” Ally Bank*, https://bit.ly/1mwOGue.

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So You Want to Buy Life Insurance for Your Parents...

Playing Monopoly as a young kid might have given you some strange ideas about money.

Take the life insurance card in the Community Chest for instance. That might give the impression that life insurance is free money to burn on whatever the next roll of the dice calls for.

In grown-up reality, life insurance proceeds are often committed long before a policy holder or beneficiary receives the check they’re waiting for. Final expenses, estate taxes, loan balances, and medical bills all compete for whatever money is paid out on the policy.

If your parents don’t have a policy or if you think their coverage won’t be enough, you can plan ahead and buy a life insurance policy for them. Your parents would be the insured, but you would be the policy owner and beneficiary.

A few extra considerations when buying a life insurance policy for your parents:

  • Age can limit coverage amounts. Assuming that your parents are older and no longer generating income, coverage amounts will be limited. If your parents are younger and still have 20 or more years ahead of them before they retire, they can qualify for a higher amount of coverage.
  • Age can limit policy types. Certain types of life insurance aren’t available when we get older, or will be limited in regard to length of coverage. Term life insurance is a good example. Your options for term life insurance will be fewer once your parents are into their sixties. The available term lengths will also be shorter. Policies with a 30-year term aren’t commonly available over the age of 50.
  • Insurable interest still applies. If your parents already have a significant amount of life insurance coverage, you may find that some insurers are reluctant to issue more coverage. Insurable interest requires that the amount of coverage doesn’t exceed the potential financial loss. (In other words, if your parents already have enough coverage, a company may not want to insure them for more.)

How Can I Use The Life Insurance For My Parents?
Depending on the amount of coverage you buy – or can buy (remember, it may be limited), you could use the policy to plan for any of the following:

  • Final expenses: You can expect funeral costs to run from $10,000 to $15,000, maybe more.
  • Estate taxes: Estate taxes and so-called death taxes can be an unpleasant surprise in many states. A life insurance policy can help you plan for this expense which could come at a time when you’re not flush with cash.

Can Life Insurance Pay The Mortgage Or Car Loans?
It isn’t uncommon for parents to pass away with some remaining debt. This might be in the form of a mortgage, car loans, or even credit card debt. These loan balances can be covered in whole or in part with a life insurance policy.

In fact, outstanding loan balances are a very big consideration. Often, people who inherit a house or a car may also inherit an additional mortgage payment or car payment. It might be wonderful to receive such a generous and sentimental gift, but if you’re like many families, you might not have the extra money for the payments in your budget.

Even if the policy doesn’t provide sufficient coverage to retire the debt completely, a life insurance policy can give you some breathing room until you can make other arrangements – like selling your parents’ house, for example.

You Control The Premium Payments.
If you buy a life insurance policy for your parents, you’ll know if the premiums are being paid because you’re the one paying them. You probably wouldn’t want your parents to be burdened with a life insurance premium obligation if they’re living on a fixed income.

Buying insurance for your parents is a great idea, but many people don’t consider it until it’s too late. That’s when you might wish you’d had the idea years ago. It’s one of the wisest things you can do, particularly if your parents are underinsured or have no life insurance at all.

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The Challenge Of Losing Your Income

You’ve already got a lot to deal with. Why buy life insurance at all?

It all comes down to protection. The idea of protecting things like your car or house are pretty common. Even if car insurance weren’t mandatory in most states or provinces, buying it would probably be a good idea. You’d want to make sure you could cover any damages from an accident – especially if you’re at fault. And protecting your investment in your home from the unexpected like an earthquake, fire, flood, theft, etc. is a bit of a no-brainer.

One of the most important things to protect before all others? Your ability to earn an income. Your income enables you to not only buy your car and your house but also the insurance to protect those things. If you were to lose your income, then those things could also be lost if you can’t afford them any longer.

Getting laid off or fired could be a cause of lost income. In that case, you still have the ability to work, which means finding a new job is possible. But in the event of a disability, critical illness, or premature death of a breadwinner? Those situations are a bit tougher to bounce back from – especially that last one.

Before becoming financially independent, a financial situation may typically be less secure, meaning you might have more financial responsibility than wealth. For example, if you don’t have a lump sum of cash to buy a house, you’d need to finance the purchase over a longer period of time via a mortgage. This creates a responsibility to continue making the mortgage payments in full and on time. Losing your income would be devastating since it could affect your payments – and when mortgage payments can’t be made, you might lose your home.

What all of this means: Your ability to earn an income should also be protected. Getting the right type and the right amount of insurance can seem complicated, especially if you’re considering all the different kinds you may need. That’s where speaking with a financial professional might come in handy. If you’re looking to protect the most important aspect of your financial situation (namely, your ability to earn income) and you’d like to see your options, let’s talk. It would be my pleasure to help you get a better understanding of your options.

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How to Build Credit When You’re Young

Your credit score can affect a lot more than just your interest rates or credit limits.

Your credit history can have an impact on your eligibility for rental leases, raise (or lower) your auto insurance rates, or even affect your eligibility for certain jobs (although in many cases the authorized credit reports available to third parties don’t contain your credit score if you aren’t requesting credit). Because credit history affects so many aspects of financial life, it’s important to begin building a solid credit history as early as possible.

So, where do you start?

  1. Apply for a store credit card.
    Store credit cards are a common starting point for teens and young adults, as it often can be easier to get approved for a store card than for a major credit card. As a caveat though, store card interest rates are often higher than for a standard credit card. Credit limits are also typically low – but that might not be a bad thing when you’re just getting started building your credit. A lower limit helps ensure you’ll be able to keep up with payments. Because you’re trying to build a positive history and because interest rates are often higher with a store card, it’s important to pay on time – or ideally, to pay the entire balance when you receive the statement.

  2. Become an authorized user on a parent’s credit card.
    Another common way to begin building credit is to become an authorized user on a parent’s credit card. Ultimately, the credit card account isn’t yours, so your parents would be responsible for paying the balance. (Because of this, your credit score won’t benefit as much as if you are approved for a credit card in your own name.) Another thing to keep in mind is that some credit card providers don’t report authorized users’ activity to credit bureaus.* Additionally, even if you’re only an authorized user, any missed or late payments on the card can affect your credit history negatively.

Are secured cards useful to build credit?
A secured credit card is another way to begin building credit. To secure the card, you make an initial deposit. The amount of that deposit is your credit line. If you miss a payment, the bank uses your collateral – the deposit – to pay the balance. Don’t let that make you too comfortable though. Your goal is to build a positive credit history, so if you miss payments – even though you have a prepaid deposit to fall back on – you’re still going to get a ding on your credit history. Instead, it’s best to use a small amount of your available credit each month and to pay in full when you get the statement. This will help you look like a credit superstar due to your consistently timely payments and low credit utilization.

As you build your credit history, you’ll be able to apply for credit in larger amounts, and you may even start receiving pre-approved offers. But beware. Having credit available is useful for certain emergencies and for demonstrating responsible use of credit – but you don’t need to apply for every offer you receive.

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Source: “Does Being an Authorized User Help You Build Credit?” Discover*, 2018, https://discvr.co/2lAzSgt.

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The Advantages of Paying with Cash

We’re using debit cards to pay for expenses more often now, a trend that seems unlikely to reverse soon.¹

Debit cards are convenient. Just swipe and go. Even more so for their mobile phone equivalents: Apple Pay, Android Pay, and Samsung Pay. We like fast, we like easy, and we like a good sale. But are we actually spending more by not using cash like we did in the good old days?

Studies say yes. We spend more when using plastic – and that’s true of both credit card spending and debit card spending.² Money is more easily spent with cards because you don’t “feel” it immediately. An extra $2 here, another $10 there… It adds up.

The phenomenon of reduced spending when paying with cash is a psychological “pain of payment.” Opening up your wallet at the register for a $20.00 purchase but only seeing a $10 bill in there – ouch! Maybe you’ll put back a couple of those $5 DVDs you just had to have 5 minutes ago.

When using plastic, the reality of the expense doesn’t sink in until the statement arrives. And even then it may not carry the same weight. After all, you only need to make the minimum payment, right? With cash, we’re more cautious – and that’s not a bad thing.

Try an experiment for a week: pay only with cash. When you pay with cash, the expense feels real – even when it might be relatively small. Hopefully, you’ll get a sense that you’re parting with something of value in exchange for something else. You might start to ask yourself things like “Do I need this new comforter set that’s on sale – a really good sale – or, do I just want this new comforter set because it’s really cute (and it’s on sale)?” You might find yourself paying more attention to how much things cost when making purchases, and weighing that against your budget.

If you find that you have money left over at the end of the week (and you probably will because who likes to see nothing when they open their wallet), put the cash aside in an envelope and give it a label. You can call it anything you want, like “Movie Night,” for example.

As the weeks go on, you’re likely to amass a respectable amount of cash in your “rewards” fund. You might even be dreaming about what to do with that money now. You can buy something special. You can save it. The choice is yours. Well done on saving your hard-earned cash.

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Sources: ¹ Steele, Jason. “Debit card statistics.” creditcards.com, https://bit.ly/2JB9cGE. ² Kiviat, Barbara. “Going Shopping? How You Pay Can Affect How Much You Spend.” Consumer Reports, https://bit.ly/2sNQiG7.

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5 Things to Consider When Starting Your Own Business

Does anything sound better than being your own boss?

Well, maybe a brand new sports car or free ice cream for life. But even a state-of-the-art fully-decked-out sports car will eventually need routine maintenance, and the taste of mint chocolate chip can get old after a while.

The same kinds of things can happen when you start your own business. There are many details to consider and seemingly endless tasks to keep organized after the initial excitement of being your own boss and keeping your own hours has faded. Circumstances are bound to arise that no one ever prepared you for!

Although this list is not exhaustive, here are 5 things to get you started when creating a business of your own:

1. Startup cost

The startup cost of your business depends heavily on the type of business you want to have. To estimate the startup cost, make a list of anything and everything you’ll need to finance in the first 6 months. Then take each expense and ask:

  • Is this cost fixed or variable?
  • Essential or optional?
  • One-time or recurring?

Once you’ve determined the frequency and necessity of each cost for the first 6 months, add it all together. Then you’ll have a ballpark idea of what your startup costs might be.

(Hint: Don’t forget to add a line item for those unplanned, miscellaneous expenses!)

2. Competitors

“Find a need, and fill it” is general advice for starting a successful business. But if the need is apparent, how many other businesses will be going after the same space to fill? And how do you create a business that can compete? After all, keeping your doors open and your business frequented is priority #1.

The simplest and most effective solution? Be great at what you do. Take the time to learn your business and the need you’re trying to fill – inside and out. Take a step back and think like a customer. Try to imagine how your competitors are failing at meeting customers’ needs. What can you do to solve those issues? Overcoming these hurdles can’t guarantee that your doors will stay open, but your knowledge, talent, and work ethic can set you apart from competitors from the start. This is what builds life-long relationships with customers – the kind of customers that will follow you wherever your business goes.

(Hint: The cost of your product or service should not be the main differentiator from your competition.)

3. Customer acquisition

The key to acquiring customers goes back to the need you’re trying to fill by running your business. If the demand for your product is high, customer acquisition may be easier. And there are always methods to bring in more. First and foremost, be aware of your brand and what your business offers. This will make identifying your target audience more accurate. Then market to them with a varied strategy on multiple fronts: content, email, and social media; search engine optimization; effective copywriting; and the use of analytics.

(Hint: The amount of money you spend on marketing – e.g., Google & Facebook ads – is not as important as who you are targeting.)

4. Building product inventory

This step points directly back to your startup cost. At the beginning, do as much research as you can, then stock your literal (or virtual) shelves with a bit of everything feasible you think your target audience may want or need. Track which products (or services) customers are gravitating towards – what items in your inventory disappear the most quickly? What services in your repertoire are the most requested? After a few weeks or months you’ll have real data to analyse. Then always keep the bestsellers on hand, followed closely by seasonal offerings. And don’t forget to consider making a couple of out-of-the-ordinary offerings available, just in case. Don’t underestimate the power of trying new things from time to time; you never know what could turn into a success!

(Hint: Try to let go of what your favorite items or services might be, if customers are not biting.)

5. Compliance with legal standards

Depending on what type of business you’re in, there may be standards and regulations that you must adhere to. For example, hiring employees falls under the jurisdiction of the Department of Labor and Federal Employment Laws. There are also State Labor Laws to consider.

(Hint: Be absolutely sure to do your research on the legal matters that can arise when beginning your own business. Not many judges are very accepting of “But, Your Honor, I didn’t know that was illegal!”)

Starting your own business is not an impossible task, especially when you’re prepared. And what makes preparing yourself even easier is becoming your own boss with an established company like WSB.

The need for financial professionals exists – everyone needs to know how money works, and many people need help in pursuing financial independence. WSB works with well-known and respected companies to provide a broad range of products for our customers. We take pride in equipping families with products that meet their financial needs.

Anytime you’re ready, I’d be happy to share my experience with you – as well as many other things to consider – when becoming an associate with WSB.

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Handling Debt Efficiently – Until It’s Gone

It’s no secret that making purchases on credit cards will result in paying more for those items over time if you’re paying interest charges from month-to-month.

Despite this well-known fact, the average American now owes over $6,000 in credit card debt.* For households, the number is much higher, at nearly $16,000 per household. Add in an average mortgage of over $200,000, plus nearly $25,000 of non-mortgage debt (car loans, college loans, or other loans) and the molehill really is starting to look like a mountain.

The good news? You have the potential to handle your debt efficiently and deal with a molehill-sized molehill instead of a mountain-sized one.

Focus on the easiest target first.
Some types of debt don’t have an easy solution. While it’s possible to sell your home and find more affordable housing, actually following through with this might not be a great option. Selling your home is a huge decision and one that comes with expenses associated with the sale – it’s possible to lose money. Unless you find yourself with a job loss or similar long-term setback, often the best solution to paying down debt is to go after higher interest debt first. Then examine ways to cut your housing costs last.

Freeze your spending (literally, if it helps).
Due to its higher interest rate, credit card debt is usually the first thing to tackle when you decide to start eliminating debt. Let’s be honest, most of us might not even know where that money goes, but our credit card statement is a monthly reminder that it went somewhere. If credit card balances are a problem in your household, the first step is to cut back on your purchases made with credit, or stop paying with credit altogether. Some people cut up their cards to enforce discipline. Ever heard the recommendation to freeze your cards in a block of ice as a visual reminder of your commitment to quit credit? Another thing to do is to remove your card information from online shopping sites to help ensure you don’t make mindless purchases.

Set payment goals.
Paying the minimum amount on your credit card keeps the credit card company happy for 2 reasons. First, they’re happy that you made a payment on time. Second, they’re happy if you’re only paying the minimum because you might never pay off the balance, so they can keep collecting interest indefinitely. Reducing or stopping your spending with credit was the first step. The second step is to pay more than the minimum so that those balances start going down. Examine your budget to see where there’s room to reduce spending further, which will allow you to make higher payments on your credit cards and other types of debt. In most households, an honest look at the bank statement will reveal at least a few ways you might free up some money each month.

Have a sale. To get a jump-start if money is still tight, you might want to turn some unused household items into cash. Having a community yard sale or selling your items online can turn your dust collectors into cash that you can then use toward reducing your balances.

Transfer balances prudently.
Consider balance transfers for small balances with high interest rates that you think you’ll be able to pay off quickly. Transferring that balance to a lower interest or no interest card can save on interest costs, freeing up more money to pay down the balances. The interest rates on balance transfers don’t stay low forever, however – typically for a year or less – so it’s important to make sure you can pay transferred balances off quickly. Also, check if there’s a balance transfer fee. Depending on the fee, moving those funds might not make sense.

Don’t punish yourself.
Getting serious about paying down debt may seem to require draconian measures. But there likely isn’t a need to just stay home eating tuna fish sandwiches with all the lights turned off. Often, all that’s required is an adjustment of old spending habits. If your drive home takes you past a mall where it would be too tempting to “just pick a little something up”, take a different route home. But it’s important to have a small treat occasionally as well. If you’re making progress on your debt, you deserve to reward yourself sometimes. All within your budget, of course!

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Sources: El Issa, Erin. “2017 American Household Credit Card Debt Study.” NerdWallet*, 2017, https://nerd.me/2ht7SZg.

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Creating Healthy Financial Habits

When it comes to building wealth and managing finances well enough to live comfortably, it’s up to your participation in a long-term financial strategy, which – more often than not – depends on creating healthy financial habits NOW.

Check out these ideas on how you can do it!

Automate it
Fortunately for us, we live in the electronic age, which can make streamlining financial goals a lot easier than in decades past. Whether building savings, investing for the future, paying down debt, or any other goals, take advantage of the apps and information available online. Savings can be put on autopilot, taking a fixed amount from your bank account each month or each pay period. The same can be done for IRAs or other investment accounts. Many mobile apps offer to automatically round up purchases and invest the spare change. (Hint: Compare your options and any associated fees for each app.)

Be mindful of small purchases
It can be much easier to be aware of making a large purchase (physically large, financially large, or both). Take a physically large purchase, for instance: it’s difficult to go into a store and come out with a washing machine and not have any memory of it. And for large financial purchases like a laptop or television, some thought usually goes into it – up to and including how it’s going to get paid for. But small, everyday purchases can add up right under your nose. Ever gone into a big box store to grab a couple of items then left having spent over $100 on those items… plus some throw pillows and a couple of lamps you just had to snag? What about that pricey cup of artisan coffee? Odds are pretty good that the coffee shop has some delicious pastries, too, which may fuel that “And your total is…” fire. $100 here, $8.50 there, another $1.75 shelled out for a bottle of water – the small expenses can add up quickly and dip right into the money that could go toward your financial strategy.

Paying with plastic has a tendency to make the tiny expenses forgettable… until you get that credit card bill. One easy way to cut down on the mindless purchases is to pay in cash or with a debit card. The total owed automatically leaves your wallet or you account, perhaps making the dwindling amount you have to set aside for your financial future a little more tangible.

Do what wealthy people do
CNBC uncovered several habits and traits that are common among wealthy individuals. Surprisingly, it wasn’t all hard work. They found that wealthy people tend to read – a lot – and continue learning through reading.¹ Your schedule may not allow for as much reading time as the average billionaire – maybe just 30 minutes a day is a good short-term goal – but getting in more reading can help you improve in any area of life!

Another thing wealthy people do? Wake up early. This may help you find that extra 30 minutes for reading. You’ll get more done in general if you get up a little earlier. A 5-year study of self-made millionaires revealed that nearly 50% of this industrious group woke up at least 3 hours before their work day started.²

Making these healthy financial habits a part of your regular routine might take some time and effort, but hang in there. Often, success is about the mindset we choose to have. If you stay the course and learn from those who’ve been where you are, you can experience the difference that good habits can make as you keep moving toward financial independence!

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¹ Paine, James. “5 Billionaires Who Credit Their Success to Reading.” Inc., https://bit.ly/2LvAM94. ² Elkins, Kathleen. “A man who spent 5 years studying millionaires found one of their most important wealth-building habits starts first thing in the morning.” Business Insider, https://read.bi/2aXjejh.

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Tips on Managing Money for Couples

Couplehood can be a wonderful blessing, but – as you may know – it can have its challenges, too.

In fact, money matters are the leading cause of arguments in modern relationships.* The age-old adage that love trumps wealth may be true, but if money is tight or if a couple isn’t meeting their financial goals, there could be some unpleasant conversations (er, arguments) on the bumpy road to bliss with your partner or spouse.

These tips may help make the road to happiness a little easier.

1. Set a goal for debt-free living.
Certain types of debt can be difficult to avoid, such as mortgages or car payments, but other types of debt, like credit cards in particular, can grow like the proverbial snowball rolling down a hill. Credit card debt often comes about because of overspending or because insufficient savings forced the use of credit for an unexpected situation. Either way, you’ll have to get to the root of the cause or the snowball might get bigger. Starting an emergency fund or reigning in unnecessary spending – or both – can help get credit card balances under control so you can get them paid off.

2. Talk about money matters.
Having a conversation with your partner about money is probably not at the top of your list of fun-things-I-look-forward-to. This might cause many couples to put it off until the “right time”. If something is less than ideal in the way your finances are structured, not talking about it won’t make the problem go away. Instead, frustrations over money can fester, possibly turning a small issue into a larger problem. Discussing your thoughts and concerns about money with your partner regularly (and respectfully) is key to reaching an understanding of each other’s goals and priorities, and then melding them together for your goals as a couple.

3. Consider separate accounts with one joint account.
As a couple, most of your financial obligations will be faced together, including housing costs, monthly utilities and food expenses, and often auto expenses. In most households, these items ideally should be paid out of a joint account. But let’s face it, it’s no fun to have to ask permission or worry about what your partner thinks every time you buy a specialty coffee or want that new pair of shoes you’ve been eyeing. In addition to your main joint account, having separate accounts for each of you may help you maintain some independence and autonomy in regard to personal spending.

With these tips in mind, here’s to a little less stress so you can put your attention on other “couplehood” concerns… Like where you two are heading for dinner tonight – the usual hangout (which is always good), or that brand new place that just opened downtown? (Hint: This is a little bit of a trick question. The answer is – whichever place fits into the budget that you two have already decided on, together!)

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Sources: Huckabee, Tyler. “Why Do People In Relationships Fight About Money So Much?” Relevant*, 1.3.2018, https://bit.ly/2xiflG9.

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Money Woes Hurt More than Your Bank Account

How do you handle job stress?

Sticking to a solid workflow? Meditation? A stress ball in each hand?

Whichever way you choose to lessen the stress (that 80% of American workers experience¹), there’s another stress-relieving tactic that could make a huge difference:

Relieving financial stress.

Studies have found that money woes can cost workers over 2 weeks in productivity a year!² And this time can be lost even when you’re still showing up for work.

This phenomenon is called ‘presenteeism’: you’re physically present at a job, but you’re working while ill or mentally disengaged from tasks. Presenteeism can be caused by stress, worry, or other issues – which, as you can imagine, may deal a significant blow to work productivity.

So what’s the good news?

If you’re constantly worried and stressed about financing unexpected life events, saving for retirement, or funding a college education for yourself or a loved one, there’s a life insurance policy that can help you – wherever you are on your financial journey.

A life insurance policy that’s tailored for you can provide coverage for those unknowns that keep you stressed and unproductive. Most people don’t plan to fail. They simply fail to plan. Think of a well-thought out insurance strategy as a stress ball for your bank account!

Contact me today, and together we’ll work on an insurance strategy that fits you and your dreams – and can help you get back to work with significantly less financial stress.

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Sources: ¹ “Workplace Stress.” The American Institute of Stress, 1.12.2018, https://bit.ly/2sejIdl. ² Pinkser, Beth. “Money Stress Is Totally Killing Your Work Productivity.” TIME Money, 3.8.2016, https://ti.me/1pwZaMr.

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Top Reasons Why People Buy Term Life Insurance

These days, most families are two-income households.

That describes 61.9% of U.S. families as of 2017¹ and 69% of Canadian families as of 2015.² If that describes your family (and the odds are good), do you have a strategy in place to cover your financial obligations with just one income if you or your spouse were to unexpectedly pass away?

Wow. That’s a real conversation-opener, isn’t it? It’s not easy to think about what might happen if one income suddenly disappeared. (It might seem like more fun to have a root canal than to think about that.) But having the right coverage “just in case” is worth considering. It’ll give you some reassurance and let you get back to the fun stuff… like not thinking about having a root canal.

If you’re interested in finding out more about Term insurance and how it may help with your family’s financial obligations, read on…

Some Basics about Term Insurance
Many of life’s financial commitments have a set end date. Mortgages are 15 to 30 years. Kids grow up and (eventually) start providing for themselves. Term life insurance may be a great option since you can choose a coverage length that lines up with the length of your ongoing financial commitments. Ideally, the term of the policy will end around the same time those large financial obligations are paid off. Term policies also may be a good choice because in many cases, they may be the most economical solution for getting the protection a family needs.

As great as term policies can be, here are a couple of things to keep in mind: a term policy won’t help cover financial commitments if you or your spouse simply lose your job. And term policies have a set (level) premium during the length of the initial period. Generally, term policies can be continued after the term expires, but at a much higher rate.

The following are some situations where a Term policy may help.

Pay Final Expenses
Funeral and burial costs can be upwards of $10,000.³ However, many families might not have that amount handy in available cash. Covering basic final expenses can be a real burden, especially if the death of a spouse comes out of the blue. If one income is suddenly gone, it could mean the surviving spouse would need to use credit or liquidate assets to cover final expenses. As you would probably agree, neither of these are attractive options. A term life insurance policy can cover final expenses, leaving one less worry for your family.

Pay Off Debt
The average households in the U.S. and Canada are carrying nearly $140,000⁴ and an average of $22,081⁵ in debt, respectively. For households with a large mortgage balance, the debt figures could be much higher. Couple that with a median household income of under $60,000 in the U.S.⁶ and just over $70,000 in Canada,⁷ and it’s clear that many families would be in trouble if one income is lost.

Term life insurance can be closely matched to the length of your mortgage, which helps to ensure that your family won’t lose their home at an already difficult time.

But what about car payments, credit card balances, and other debt? These other debt obligations that your family is currently meeting with either one or two incomes can be put to bed with a well-planned term life policy.

Income Protection
Even if you’ve planned for final expenses and purchased enough life insurance coverage to pay off your household debt, life can present many other costs of just… living. If you pass unexpectedly, the bills will keep rolling in for anyone you leave behind – especially if you have young children. Those day-to-day living costs and unexpected expenses can seem to multiply in ways that defy mathematical concepts. (You know – like that school field trip to the aquarium that no one mentioned until the night before.) The death benefit of a term life insurance policy may help, for a time, fill in the income gap created by the unfortunate passing of a breadwinner.

But Wait, There’s More… There are term life insurance policies available that can provide other benefits as well, including living benefits that may help keep medical expenses from wreaking havoc on your family’s financial plan if you become critically ill. One note about the living benefits policies, though: If the critical and chronic illness features are used, the face value of the policy is reduced. It’s important to consider whether a reduction in the death benefit would be a good alternative to using savings planned for other purposes.

In some cases, policies with built-in living benefits may cost more than a standard term policy but may still cost less than permanent insurance policies! And because a term policy is in force only during the years when your family needs the most protection, premiums can be lower than for other types of life insurance.

Term life insurance can provide income protection to help keep your family’s financial situation solid, and help things stay as “normal” as they can be after a loss.

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Sources: ¹ United States Department of Labor. “Employment Characteristics of Families Summary.” Bureau of Labor Statistics, 4.19.2018, https://bit.ly/2kSHDvm. ² “Dual-income families with kids have doubled in Canada over past 40 years, StatsCan says.” CBC News, 5.30.2016, https://bit.ly/1OYwORd. ³ “Funeral Costs: How Much Does an Average Funeral Cost?” Parting, 9.14.2017, https://bit.ly/2isoHUC. ⁴ Sun, Leo. “A Foolish Take: Here’s how much debt the average U.S. household owes.” USA Today, 11.18.2017, https://usat.ly/2hJ7lah. ⁵ Evans, Pete. “Canadians’ average debt load now up to $22,081, 3.6% rise since last year.” CBC News, 12.7.2016, https://bit.ly/2gaxIUn. ⁶ Loudenback, Tanza. “Middle-class Americans made more money last year than ever before.” Business Insider, 9.12.2017, https://read.bi/2f3ey3F. ⁷ “Household income in Canada: Key results from the 2016 Census.” Statistics Canada, 9.13.2017, https://bit.ly/2rBX3JE.

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Why You Should Care About Insurable Interest

First of all, what is insurable interest?

It’s simply the stake you have in something that is being insured – and that the amount of insurance coverage for whatever is being insured is not more than your potential loss.

To say things could become a bit awkward might be an understatement if your insurable interest isn’t considered before you’re deep into the planning phase of a project or before you’ve signed some papers, like a title or a loan.

It’s better for your sanity to understand insurable interest beforehand. Where the issue of insurable interest often arises is in auto insurance. Let’s look at an example.

Let’s say you have a car that’s worth $5,000. $5,000 is the maximum amount of money you would lose if the car is stolen or damaged – and $5,000 would be the most you could insure the car for. $5,000 is your insurable interest.

In the above example, you own the car, so you have an insurable interest in it. By the same token, you can’t insure your neighbor’s car. If your neighbor’s car was stolen or damaged, you wouldn’t suffer any financial loss because it wasn’t your car.

Here’s where it might get a little tricky and why it’s important to understand insurable interest. Let’s say you have a young driver in the house, a teenager, and it’s time for him to get mobile. He’s been saving up his lawn-mowing money for two years and finally bought the (used) car of his dreams.

You might have considered adding your son’s car to your auto policy to save money – you’ve heard how much it can cost for a teen driver to buy their own policy. Sounds like a good plan, right? However, the problem with this strategy is that you don’t have an insurable interest in your son’s car. He bought it, and it’s registered to him.

You might find an insurance sales rep who will write the policy. But there’s a risk the policy won’t make it through underwriting and – more importantly – if there’s a claim with that car, the claim might not be covered because you didn’t have an insurable interest in it. If you want to put that car on your auto insurance policy, the car needs to be registered to the named insured on the policy – you.

Insurable Interest And Lenders
If you have a mortgage or an auto loan, your lender is probably listed on your policy. Both you and the lender have an insurable interest in the house or the car. Over time, as the loan is paid down, you’ll have a greater insurable interest and the lender’s insurable interest will become smaller. (Hint: When your loan is paid off, ask your agent to remove the lender from the policy to avoid any confusion or delays if you have a claim someday.)

Does Ownership Create Insurable Interest?
Good question. It might seem like ownership and insurable interest are equivalent – they often occur simultaneously. But there are times when you can have an insurable interest in something without being an owner.

Life insurance is a great example of having an insurable interest without ownership. You can’t own a person – but if a person dies, you may experience a financial loss. However, just as you can’t insure your neighbor’s car, you can’t purchase a life insurance policy on your neighbor, either. You’d have to be able to demonstrate your potential loss if your neighbor passed away. And no it doesn’t count if they never returned those hedge clippers they borrowed from you last spring.

So now you know all about insurable interest. While insurable interest requirements may seem inconvenient at times, the rules are there to protect you and to help keep rates lower for everyone. Without insurable interest requirements, the door is open to fraud, speculation, or even malicious behavior. A little inconvenience seems like a much better option.

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Is Survivorship Life Insurance Right For You?

A survivorship life insurance policy is a type of joint insurance policy (a policy built for two).

You may not have thought much about that type of insurance before, or even knew it existed. But joint policies, especially survivorship policies, are important to consider because they can provide for heirs, settle estates, and pay for final expenses after both spouses have passed.

Most joint life insurance policies are what’s known as “first to die” policies. As the unambiguous nickname suggests, a first to die policy is designed to provide for the remaining spouse after the first passes.

A joint life insurance policy is a time-tested way of providing for a remaining spouse. But without careful planning, a typical joint life policy might leave a burden for surviving children or other family members.

A survivorship life insurance policy works differently than a first to die policy. Also called a “last to die” policy, a survivorship policy provides a death benefit only when both insured spouses have passed. A survivorship policy doesn’t pay a death benefit to either spouse but rather to a separate named beneficiary.

You’ll find survivorship life insurance referred to as:

  • Joint Survivor Life Insurance
  • Second-to-Die Life Insurance
  • Variable Survivorship Insurance

Survivorship life insurance policies are sometimes referred to by different names, but the structure is the same in that the policy only pays a benefit after both people insured by the policy have died.

Reasons to Buy Survivorship Life Insurance
We all have our reasons for buying a life insurance policy, and often have someone in mind who we want to protect and provide for. Those reasons often dictate the best type of policy – or the best combination of policies – that can meet our goals.

A survivorship policy is well-suited to any of the following considerations, perhaps in combination with other policies:

  • Final expenses
  • Estate taxes
  • Lingering medical expenses
  • Payment of debt
  • Transfer of wealth

It’s also most common for a survivorship life insurance policy to be a permanent life insurance policy. This is because the reasons for using a survivorship policy, including transfer of wealth, are usually better served by a permanent life policy than by a term insurance policy. (A term life insurance policy is only in force for a limited time and doesn’t build any cash value.)

Benefits of Survivorship Life Insurance

  • A survivorship life policy can be an effective way to transfer wealth as part of a financial strategy.
  • Life insurance can be difficult to purchase for individuals with certain health conditions. Because a survivorship life insurance policy is underwriting coverage based on two individuals, it may be possible to purchase coverage for someone who couldn’t easily be insured otherwise.
  • As a permanent life insurance policy, a survivorship life policy builds cash value that can be accessed if needed in certain situations.
  • Costs can be lower for a survivorship life policy than insuring two spouses individually.

The good news is that life insurance rates are more affordable now than in the past. That’s great! But keep in mind, your life insurance policy – of any type – will probably cost less now than if you wait for another birthday to pass for either spouse insured by the policy.

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World Financial Group, Inc., its affiliated companies and its independent associates do not offer tax and legal advice. Please consult with your personal tax and/or legal professional for further guidance.

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What Does “Pay Yourself First” Mean?

Do you dread grabbing the mail every day?

Bills, bills, mortgage payment, another bill, maybe some coupons for things you never buy, and of course, more bills. There seems to be an endless stream of envelopes from companies all demanding payment for their products and services. It feels like you have a choice of what you want to do with your money ONLY after all the bills have been paid – if there’s anything left over, that is.

More times than not it might seem like there’s more ‘month’ than ‘dollar.’ Not to rub salt in the wound, but may I ask how much you’re saving each month? $100? $50? Nothing? You may have made a plan and come up with a rock-solid budget in the past, but let’s get real. One month’s expenditures can be very different than another’s. Birthdays, holidays, last-minute things the kids need for school, a spontaneous weekend getaway, replacing that 12-year-old dishwasher that doesn’t sound exactly right, etc., can make saving a fixed amount each month a challenge. Some months you may actually be able to save something, and some months you can’t. The result is that setting funds aside each month becomes an uncertainty.

Although this situation might appear at first benign (i.e., it’s just the way things are), the impact of this uncertainty can have far-reaching negative consequences.

Here’s why: If you don’t know how much you can save each month, then you don’t know how much you can save each year. If you don’t know how much you can save each year, then you don’t know how much you’ll have put away 2, 5, 10, or 20 years from now. Will you have enough saved for retirement?

If you have a goal in mind like buying a home in 10 years or retiring at 65, then you also need a realistic plan that will help you get there. Truth is, most of us don’t have a wealthy relative who might unexpectedly leave us an inheritance we never knew existed!

The good news is that the average American could potentially save over $500 per month! That’s great, and you might want to do that… but how* do you do that?

The secret is to “pay yourself first.” The first “bill” you pay each month is to yourself. Shifting your focus each month to a “pay yourself first” mentality is subtle, but it can potentially be life changing. Let’s say for example you make $3,000 per month after taxes. You would put aside $300 (10%) right off the bat, leaving you $2,700 for the rest of your bills. This tactic makes saving $300 per month a certainty. The answer to how much you would be saving each month would always be: “At least $300.” If you stash this in an interest-bearing account, imagine how high this can grow over time if you continue to contribute that $300.

That’s exciting! But at this point you might be thinking, “I can’t afford to save 10% of my income every month because the leftovers aren’t enough for me to live my lifestyle”. If that’s the case, rather than reducing the amount you save, it might be worthwhile to consider if it’s the lifestyle you can’t afford.

Ultimately, paying yourself first means you’re making your future financial goals a priority, and that’s a bill worth paying.

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Source: Martin, Emmie. “Here’s how much money the average middle-aged American could save each month.” CNBC*, 11.8.2017, https://www.cnbc.com/2017/11/08/how-much-money-the-average-middle-aged-american-could-save-each-month.html.

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Don't Panic: What You Need To Know For Your Life Insurance Medical Exam

I don’t know about you, but most people don’t like exams – either taking one or having one done to them.

But there’s no need to panic over your life insurance medical exam (yes, you’re probably going to have one). I’ve got some steps you can take before the “big day” to help prevent readings which may skew your test results or create unnecessary confusion.

One important thing to keep in mind is that the exam’s purpose isn’t to pass or fail you based on your health. Your insurer just needs to understand the big picture so they can assign an accurate rating. Oftentimes, the news can be better than expected, and generally good health is rewarded with a lower rate. Alternatively, the exam might uncover something that needs attention, like high cholesterol. That might be something good to know so you can make necessary lifestyle changes.

Think of your exam as a big-picture view. Your insurer will measure several key aspects of your health. These areas help determine your life insurance class, which is simply a group of people with similar overall health characteristics.

Your insurer will most likely look at:

  • Height and weight
  • Pulse/blood pressure tests
  • Blood test
  • Urine test

Tests can indicate glucose levels, blood pressure levels, and the presence of nicotine or other substances. Body Mass Index (BMI) – a measurement of overall fitness in regard to weight – may also be measured as part of your life insurance exam.

So let’s find out what you can do to prepare for your exam!

The most obvious cause that could affect your results is medications you’ve taken recently. These will probably show up in your blood tests. Bring a list of any prescription medications you’re taking so your insurer can match those to the blood analysis.

Over the counter meds can interfere with test results and create inaccurate readings too, so it might be best to avoid them for 24 hours prior to your medical exam if possible. Caffeine can cause spikes in blood pressure.¹ Limit your caffeine intake or avoid it altogether, if possible, for 48 hours prior to your exam. Smoking can elevate blood pressure as well.²

Alcohol has a similar effect on blood pressure.³ Try to avoid alcohol for 48 hours prior to taking your life insurance medical exam. Some types of exercise can also spike blood pressure readings temporarily.⁴ If you can, avoid strenuous exercise for 24 hours before your medical exam.

Some types of foods can create false readings or temporarily raise cholesterol levels.⁵ It’s best to avoid eating for 12 hours prior to your exam, giving your body time to clear temporary effects. Scheduling your exam for the morning makes this easier.

Stress can affect blood pressure readings.⁶ (Surprise, surprise.) Try to schedule your life insurance medical exam for a time when you’ll be less stressed. After work might not be the best time, but maybe after a good night’s rest would be better.

Have any further questions on how you can prepare for your exam? I’m here to help!

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Sources: ¹ Sheps, Dr. Sheldon G. “Caffeine: How does it affect blood pressure?” Mayo Clinic, 10.19.17, https://mayocl.in/2DB4pSt. ² “Smoking, High Blood Pressure and Your Health.” American Heart Association, 1.10.2018, https://bit.ly/2pSR2HE. ³ “Short-term Negative Effects of Alcohol Consumption.” BACtrack, 2018, https://bit.ly/2E5iOFX. ⁴ Barlowe, Barrett. “Does Exercise Raise Blood Pressure?” Livestrong, 8.14.2017, https://bit.ly/2GGKd6K. ⁵ Hetzler, Lynn. “What Not to Eat Before Cholesterol Check.” Livestrong, 8.14.2017, https://bit.ly/2J01mq9. ⁶ “Managing Stress to Control High Blood Pressure.” American Heart Association, 1.29.2018, https://bit.ly/2Ghc11T.

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4 Reasons Why Life Insurance From Work May Not Be Enough

In some industries, the competition for good employees is as big a battle as the competition for customers.

As part of a benefits package to attract and keep talented people, many employers offer life insurance coverage. If it’s free – as the life policy often is – there’s really no reason not to take the benefit. Free is (usually) good. But free can be costly if it prevents you from seeing the big picture.

Here are a few important reasons why a life insurance policy offered through your employer shouldn’t be the only safety net you have for your family.

1. The Coverage Amount Probably Isn’t Enough.
Life insurance can serve many purposes, but two of the main reasons people buy life insurance are to pay for final expenses and to provide income replacement.

Let’s say you make around $50,000 per year. Maybe it’s less, maybe it’s more, but we tend to spend according to our income (or higher) so higher incomes usually mean higher mortgages, higher car payments, etc. It’s all relative.

In many cases, group life insurance policies offered through employers are limited to 1 or 2 years of salary (usually rounded to the nearest $1,000), as a death benefit. (The term “death benefit” is just another name for the coverage amount.)

In this example, a group life policy through an employer may only pay a $50,000 death benefit, of which $10,000 to $15,000 could go toward burial expenses. That leaves $35,000 to $40,000 to meet the needs of your spouse and family – who will probably still have a mortgage, car payment, loans, and everyday living expenses. But they’ll have one less income to cover these. If your family is relying solely on the death benefit from an employer policy, there may not be enough left over to support your loved ones.

2. A Group Life Policy Has Limited Usefulness.
The policy offered through an employer is usually a term life insurance policy for a relatively low amount. One thing to keep in mind is that the group term policy doesn’t build cash value like other types of life policies can. This makes it an ineffective way to transfer wealth to heirs because of its limited value.

Again, and to be fair, if the group policy is free, the price is right. The good news is that you can buy additional policies to help ensure your family isn’t put into an impossible situation at an already difficult time.

3. You Don’t Own The Life insurance Policy.
Because your employer owns the policy, you have no say in the type of policy or the coverage amount. In some cases, you might be able to buy supplemental insurance through the group plan, but there might be limitations on choices.

Consider building a coverage strategy with policies you own that can be tailored to your specific needs. Keep the group policy as “supplemental” coverage.

4. If You Change Jobs, You Lose Your Coverage.
This is actually even worse than it sounds. The obvious problem is that if you leave your job, are fired, or are laid off, the employer-provided life insurance coverage will be gone. Your new employer may or may not offer a group life policy as a benefit.

The other issue is less obvious.

Life insurance gets more expensive as we get older and, as perfectly imperfect humans, we tend to develop health conditions as we age that can lead to more expensive policies or even make us uninsurable. If you’re lulled into a false sense of security by an employer group policy, you might not buy proper coverage when you’re younger, when coverage might be less expensive and easier to get.

As with most things, it’s best to look at the big picture with life insurance. A group life policy offered through an employer isn’t a bad thing – and at no cost to the employee, the price is certainly attractive. But it probably isn’t enough coverage for most families. Think of a group policy as extra coverage. Then we can work together to design a more comprehensive life insurance strategy for your family that will help meet their needs and yours.

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What You Need To Know About Permanent Life Insurance

Most people, when they think of life insurance, might think of two types: Term Life Insurance and Whole Life Insurance.

There are two types of policies, but it’s more accurate to think of them as temporary or permanent. It’s kind of like renting an apartment vs. buying a home. When you rent, it’s probably going to be temporary, depending on your situation. However when you buy a house, the feeling is more like you’re settling down and you’ll be there for the long-haul. When you rent, you don’t build value. But when you buy, you can build more equity in your home the longer you own it.

Permanent life insurance can build a cash value, something a term policy can’t do. A term life policy only has monetary value when it pays a death benefit in a covered claim. Temporary and permanent policies also have some types of their own.

For example, term life insurance can include living benefits or critical illness coverage, as well as group term life insurance and key person life insurance, which is sometimes used in businesses. (Note: Living benefits and critical illness coverage are optional and available at additional cost.) These are all designed to be temporary coverage. Here’s why. The policy might guarantee premiums for 10 years – or as long as 30 years – but after its term has expired, a term policy can become price-prohibitive. For this reason the coverage is, for all practical purposes, considered temporary.

Permanent Life Insurance: Designed to Last a Lifetime

As its name suggests, permanent life insurance is built to last. It’s a common perception that permanent life insurance and whole life insurance are synonymous, but whole life insurance is just one type of permanent life insurance.

At first glance, a permanent life insurance policy can seem more expensive than a term policy, but you’d have to consider the big picture to be fair in comparing the two options. Over the course of a full lifetime, permanent life insurance can be less costly – in part – because term policies become expensive if you require coverage after the initial term has expired. An investment element also helps to build cash value in a permanent life insurance policy, taking pressure off premiums to provide coverage.

If I’ve left you scratching your head over your options, no worries! Understanding the benefits of each type is important, and choosing which policy is best for you is a uniquely personal experience. Contact me, and we’ll review your options to find the right strategy for you and your family.

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Are You Unwinding Yourself Into Debt?

Both Americans and Canadians each owe more than $1 trillion in credit card debt.

You read that right: more than $1 trillion.

That number is up 6.2% in Canada from 1 year ago. At this rate, it seems like more and more people are going to end up being owned by a tiny piece of plastic rather than the other way around.

How much have you or a loved one contributed to that number? Whether it’s $10 or $10,000, there are a couple simple tricks to get and keep yourself out of credit card debt.

The first step is to be aware of how and when you’re using your credit card. It’s so easy – especially on a night out when you’re trying to unwind – to mindlessly hand over your card to pay the bill. And for most people, paying with credit has become their preferred, if not exclusive, payment option. Dinner, drinks, Ubers, a concert, a movie, a sporting event – it’s going to add up.

And when that credit card bill comes, you could end up feeling more wound up than you did before you tried to unwind.

Paying attention to when, what for, and how often you hand over your credit card is crucial to getting out from under credit card debt.

Here are 2 tips to keep yourself on track on a night out.

1. Consider your budget. You might cringe at the word “budget”, but it’s not an enemy who never wants you to have any fun. Considering your budget doesn’t mean you can never enjoy a night out with friends or coworkers. It simply means that an evening of great food, fun activities, and making memories must be considered in the context of your long-term goals. Start thinking of your budget as a tough-loving friend who’ll be there for you for the long haul.

Before you plan a night out:

  • Know exactly how much you can spend before you leave the house or your office, and keep track of your spending as your evening progresses.
  • Try using an app on your phone or even write your expenses on a napkin or the back of your hand – whatever it takes to keep your spending in check.
  • Once you have reached your limit for the evening – stop.

2. Cash, not plastic (wherever possible). Once you know what your budget for a night out is, get it in cash or use a debit card. When you pay your bill with cash, it’s a concrete transaction. You’re directly involved in the physical exchange of your money for goods and services. In the case that an establishment or service will only take credit, just keep track of it (app, napkin, back of your hand, etc.), and leave the cash equivalent in your wallet.

You can still enjoy a night on the town, get out from under credit card debt, and be better prepared for the future with a carefully planned financial strategy. Contact me today, and together we’ll assess where you are on your financial journey and what steps you can take to get where you want to go – hopefully by happy hour!

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What Happens If a Life Insurance Policy Lapses?

A lapse in a life insurance policy occurs when a premium isn’t paid.

There is a brief grace period (typically 30-31 days) in which a premium payment for a life insurance policy can still be made.¹ But if the payment is not made during the grace period, the life insurance policy will lapse. At this point, all benefits are lost.

There are circumstances in which the life insurance policy can be recovered. It could be as simple as resuming premium payments… or it could involve a lengthy process that includes a new medical exam, repaying all premium payments from the lapsed period, and possibly the services of an attorney.

The best practice to avoid a policy lapse is to make premium payments on time. To help out their customers, many insurance companies can automatically withdraw the monthly payment from a checking account, and some companies may take missed premium payments out of the policy’s cash value – but please note: term life insurance has no cash value. In this case, missed premium payments won’t have the cash value failsafe. If you’re in danger of a lapse, contact me today. Together we can review your financial strategy to help you and your loved ones stay covered.

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Source: ¹“Life Insurance Lapse Lawyer.” Life Insurance Attorney, 2018, https://bit.ly/2MZR4LO.

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