Protect Your Family: The Importance of Life Insurance – GS16

If you don’t have life insurance and you have a family that you support, today is your day. Part of preparation is for our benefit and part of it is for the benefit of our loved ones. In this case you and I won’t have any tangible benefit from purchasing life insurance, but the peace of knowing that our loved ones will have a nice financial buffer is pretty nice. Video Intro Can’t see the video in your RSS reader or email? Click Here! Just like the FLOP we mentioned the other day, the hope is that you will never need to use this. But if that day were ever to come, there would be some people in your life who were really glad that you and I spent an hour or two taking care of it. There is a lot of debate about all the details of what kind and how much, and everyone’s situation is unique. So just take what I suggest as an opinion and do more homework to figure out what kind you need. What kind do I need? For most people and most situations I think Term Life insurance is the best bet. It is the cheapest kind of insurance and the easiest to understand. It is as simple as agreeing to pay $100/year for 10 years to have $100,000 of coverage. Whole life (and most other forms) are a bit more complex and can offer some benefits for certain situations, but again term is normally your best best. So how much do I need? This is like asking what is a good salary? Everyone’s definition will be different. The rule-of-thumb that I have commonly heard is 8-12x your annual salary (after tax). But I suggest you think through your particular situation and think through what your family would need. In our particular case, I bought a term policy that would pay off the house and cover my funeral expenses. This is far less than the 8-12x figure, but because we don’t have kids yet and my wife earns an income she would easily be able maintain her standard of living if the house were paid off. Your situation will be different. But just spend a few minutes discussing and thinking how your family would get along if you left the earth a little early. Remember, don’t get hung up on the details. The key is just to first make sure that your family is covered, then you can split hairs on the details. My hunch is that most of our loved ones won’t give a lot of thought to how big the life insurance check is, they will just be grateful that it is there. How much does it cost? I was surprised how cheap term-life insurance can be. Granted, I am very young (30) and in good health, but relative to a lot of other expenses we all have it is really cheap. I think I am paying $123/year for my policy – which comes out to about $10/month. Homework Talk to your spouse and figure out how much insurance you think you need. Use this calculator and learn more if needed. Get a  life insurance quote online or find a trustworthy insurance agent (you can use the form below to find someone from our partner Christian Network).   Related Articles: Zander Life Insurance | Review Do newlyweds need life insurance? Buying life insurance for your parents: Is it wise? Is it wrong? Christian View of Life Insurance: A Lack of Faith? Bob enjoys dark chocolate, paying off debt, giving, Foosball, loose-leaf tea, helping people succeed, learning, anything God created, playing guitar, Philippians, excellence, Chick-Fil-A, and making his wife smile. He started ChristianPF in 2007 and Co-Founded Blogging Your Passion in 2011. Find him on Facebook & Twitter .

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2 Critical Questions to Ask Your Financial Professional

Picture this scenario: You have a meeting tomorrow that you’ve scheduled with a financial professional because you know that proper planning is important.  You’re proud of yourself for taking action and scheduling this meeting and you feel a sense of accomplishment for doing so.  You know that this is a huge step to take.  However, you can’t shake this nagging feeling inside that says, “I have NO idea what I’m doing when it comes to this stuff, and besides, how do I even know that the person I’m meeting with has my best interests at heart?!” You’re not alone on this one.  It may be safe to say that most people feel this way and, if they’re not saying it, they’re thinking it.  I mean, who wouldn’t?  From the meltdown in the mortgage industry to the Bernie Madoff’s of the world, the financial services industry hasn’t exactly been portrayed as a bastion of virtue.  Granted, that may sound unfair since the number of financial professionals that truly do have a heart to put the clients best interests first far outweigh the number of those who are blinded by greed and seek their own gain. Yet, because of the latter, millions of Americans every year are hesitant to meet with a financial expert.  Some even putting off planning altogether, due to a lack of knowledge, expertise, and, ultimately, trust in the industry itself. So, the question that haunts the minds of every well-intentioned person who simply wants to properly protect what they have and leave a financial legacy to those they leave behind is this: “Is there really any way to equip myself to be able to discern if the financial professional that I’m meeting with is looking out for my best interests?” Of course there is.  And to be perfectly honest, this stuff really isn’t that complicated. Here it is in a nutshell: Proper financial planning really addresses two major issues…dying too soon and living too long.   It simply matches assets to liabilities.  That’s it!  Think about it.  It all boils down to life insurance and retirement planning .  Utilizing a s uitable life insurance policy protects your family against you dying too soon.  Having a review done by the right person makes absolutely certain your life insurance policy is the correct type, correct amount, & best value.   On the other side of the equation, a suitable investment strategy protects your family from living too long.  Having an objective review done in this area makes absolutely certain your investments match your liabilities considering risk, growth, & value.  Both of these strategies assure sufficient money to fully fund a lifetime of financial needs and, at the end of the day, the average person would sleep much better at night knowing that these two issues were off of their “to-do” list.  Wouldn’t you?  It’s a pretty powerful thing to know that your family is set financially and won’t have to struggle if something were to suddenly happen to you (i.e. Death) that cuts off your family’s income stream.  The majority of people have others that are dependent on their income and this can be a major cause of stress if not properly handled.  Likewise, in the wake of one of the worst market crashes in history (2008), millions of Americans saw their retirement accounts dwindle anywhere between 37% and 50% seemingly overnight.  The subject of outliving their retirement (i.e. running out of money before you die) is a very new reality that many people simply weren’t prepared for.  Fortunately, there are incredibly practical solutions to both of these problems, and having a fiduciary (person of trust who acts solely in your best interest) in your court literally can make all the difference in the world.  To know whether or not your advisor is really on the same side of the table as you, here are two very easy questions that you can ask in order to see who’s best interest they have in mind: 1.  Do You Offer More Than One Company’s Products? In my opinion, this is one of the most important questions that you can ask any financial professional.  Why? Because the answer to this question reveals to you whether or not the person sitting across the table from you can offer you multiple solutions from multiple companies.  Remember, the end-user here is YOU.  Wouldn’t you prefer to have someone that can choose from a variety of different companies, products, and services in order to best serve your needs over someone who has to “fit” your situation into their limited arsenal of proprietary products and services? A red flag should go up if you have someone telling you why “their” product or service is better than everyone else’s when it comes to financial planning.  Each individual situation is unique .  There is no “one-size-fits-all” product to meet everyone’s needs.  The bottom line is this: the person who can offer multiple products from multiple companies may have more independence, freedom, and objectivity when it comes to providing the right solution to fit your individual situation. 2.  Do You Have Sales Quotas? Let’s be clear…sales quotas are different from sales goals .  It is safe and healthy for a financial professional (or anyone for that matter) to set goals for themselves and to have a plan to achieve them.  That’s a fact that most people wouldn’t argue with.  A quota, on the other hand, is much different and has the propensity to cause many good people to do not so good things.  Is it fair to say that anyone who is working under a quota system is going to do something unethical?  Of course not and I would be grossly ignorant to suggest such a thing.  Having a sales quota means that someone working in that environment is bound and obligated to meet certain performance standards (i.e. sales transactions) in order to maintain their position.  Typically, failing to meet a quota can result in demotion, replacement, or even termination.  This is exactly the type of high-stress environment that I would NOT want my financial advisor to be working under!  Imagine if it were the end of the month and he or she had to either make one more sale or risk being fired, only to have to go home and tell their spouse and children that they may lose the house because of it.  That scenario is not as far from reality as we may choose to believe!  The point is that someone in that position may be under extreme temptation to offer a certain product or service that pays them more than an alternative solution that may be better for their client.  Conversely, if the professional that’s helping you is under no pressure or fear of losing their job under a quota system, everyone involved in the relationship will be able to relax, breath a little easier, and take the time to figure out which solution makes the most sense for YOU.   Obviously, there are many more questions that can, and should be, asked of your financial advisor before moving forward.  However, starting off your relationship with these two practical (and revealing) questions can very quickly and easily help uncover who you are working with and can help you to avoid wasting time, energy and possibly thousands of dollars in the process! Which question do you think is most important to ask your financial professional?  Leave a comment and help empower someone else! Image by  Deklofenak / Shutterstock Related Articles: 10 Questions to Ask a Financial Planner How to Avoid A Bad Financial Advisor: 5 Red Flags To Watch For Money Mentors: Who Should Influence Your Financial Life and Where To Find Them Introducing the Christian Financial Forums The Ingredients Necessary For A Healthy Financial Plan How To Spend Unexpected Income: 3 Questions To Ask Primerica – The pros and cons Adam Simon is a devoted Christian, husband, and father of four. At age 19, his life was dramatically changed by God, forever transforming his life to one of unwavering passion and service to Christ. Today, through his writing, speaking, and love of God, Adam shares his personal message of faith and family with people everywhere. You can reach out to Adam directly at asimon126@gmail.com and through Facebook & Twitter . The articles on this site are for entertainment purposes and should not be taken as financial advice. Please contact a financial professional for specific advice regarding your situation. Also, many of the CPF articles help us pay the bills by using affiliate relationships with Amazon, Google, eBay and others. Find out more here .

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Beyond the Will: Steps to Help Those Left Behind

Being financially responsible typically includes the important legal documents of a will , financial power of attorney, and advanced medical directives. There are a few more steps you can take beyond the will. Many people do not think through all the little decisions that will need to be made when your time on Earth has ended:  a hurting or grieving spouse may not think clearly & the closest relative may be a thousand miles away. Spending a few hours gathering your documents &  sharing your thoughts can be a final blessing to your family and friends. Service details Writing down your wishes for funeral services is not just an exercise for the older generation. A brief conversation with your spouse and a few notes with another relative (in case the spouse isn’t available to make decisions) can be a good road map to make things easier during this difficult time.  Include preference on burial or cremation, special songs or poems, and final resting place. Location, location, location You need to let someone know where to find your valid will. We keep ours in a safety deposit box with one of our parents as a key holder & signer – we double-checked with the bank that they could access the box in time of death. Some people opt to keep their signed wills at home in a safe, locked file cabinet, or even the mostly fire-proof freezer. Tell a trusted friend or relative where to locate wills easily and quickly. Guardians and trustees of children Guardianship and Financial Trusts will be covered in the legal documents. You can provide other details for the guardians and trustees. For the children’s guardians, write a letter of what you hope and dream about for your children. Mention church sacraments, music lessons, sports participation, summer camp, or trips to grandparents in the summertime. To the assets’ trustee, detail how you would like the funds to pay or co-pay for cars, computers, proms, college expenses, moving expenses, apartment security deposits, weddings, etc. Household items In Heaven, we may no longer need our possessions but someone will have to deal with them on Earth. Write-up how you would like to see this handled. Give permission to use the estate’s assets to move your grandmother’s Duncan Phyfe table to a relative’s house.  Also give permission to donate all the household items that will not be needed by the children and mention your preferred charity. Create a list of items you want to go to a specific person if not already in the will.  Include a list of the items you want kept for your children to have in their adulthood.  Describe why the item is important to you and the history behind it – otherwise it’s just another candy dish. Your notes will be your voice to help make sorting easier. Financial documents The mail used to be a tattle-tell of a person’s business. Now, most business is conducted online – including statements of accounts.  Create a master list of all companies where you have business for banking, investments, credit cards, mortgages, monthly household expenses, and insurance . If you keep paper statements, include this storage location when you let someone know where to find your will.  We always keep them in a bright green folder on my closet shelf.  Considering I’ve moved 8 times, this is consistent from house to house. Online identities We are increasing our online identities every day.  Beyond the online access to financial accounts, consider updating a list of usernames and passwords for all social media.  You may not live forever on this Earth, but your facebook and LinkedIn page just might.  This can be as simple as sealing up the list and placing with the wills. The “Talk” We are fairly frank about estate planning in our family since my parents have a family business and my husband was in a dangerous occupation with the military.  Our young adult children get a quick update on things several times a year. Do your adult children know where to find your papers?  Do they know your wishes? If you haven’t discussed these things with your parents, why not let them know you are doing this yourself and ask if they have anything they would like to share with you? Your final gift Dave Ramsey discusses many of these topics as part of a Legacy Drawer – the final gift to your family.  The biggest investment of time will be the first time you tackle these issues.  An annual update should take only an afternoon. Have you made a will? What other preparations have you made for leaving Earth? Meet us in the comments. Image by  alexskopje / Shutterstock Related Articles: Winning Defensive Financial Strategies (Part 2) How Often Should You Review Your Household Budget Sheet? 4 Steps to Get Your Finances Under Control 3 Steps to Strengthen Your Emergency Fund 7 Tips To Involve Your Spouse In The Family Finances 6 Tax Saving Tips To Help You Save Money Next Year Fall Financial Checklist Cherie is a small business accountant with a passion to teach others about personal finance -especially military families through the Financial Peace program. With her son & daughter at college, Cherie enjoys spending time with her husband of 23 years, quilting, and volunteering. The articles on this site are for entertainment purposes and should not be taken as financial advice. Please contact a financial professional for specific advice regarding your situation. Also, many of the CPF articles help us pay the bills by using affiliate relationships with Amazon, Google, eBay and others. Find out more here .

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