Why Do I Need Life Insurance?
Video Transcript: Why do I need life insurance?
0:00 Hello this is Phil with Foundation Wealth Planning. Thanks for stopping by. We got a topic about life insurance today and why it's important, why you should look at it. 0:09 So I hope you find this interesting. If you do, please like it, share it, subscribe, follow these videos, follow the Instagram. 0:18 Love to keep getting the message out with these short little videos that are hopefully informative, maybe a little entertaining. I don't know. 0:26 Anyway, let me know how I'm doing. Let me know what questions you have. If you have any topics that you think that I should cover in future videos, please let me know in the comments or email me. 0:36 And again, I hope you enjoy.
So today we're talking about life insurance and life insurance is maybe a little bit boring for some of you, but I want to give you a Bible verse that I think. 0:49 maybe puts it in context how important this can be. Now there isn't any direct references. You know, as far as we can tell about life insurance in the Bible, because life insurance wasn't really a thing back then. 1:03 However, there are references taking care of your family, which in the modern economy can be taken care of a few different ways. 1:10 But one of those ways would be insurance as a whole and specifically life insurance. So there is, a bio passage from 1 Timothy 5:8. 1:21 So this says, “If anyone does not provide for his relatives and especially his own family, one has disavowed the faith that is worse than an unbeliever.”
1:32 So if we're not providing for our family, that would not be good according to the Bible. So I'm not here to debate theological points or, you know, big biblical discussions. 1:50 I'm just a layman. However, I would say in the current world that we're in life insurance is very important. And its important for taking care of your family when you are no longer here to provide. 2:03 So what is life insurance? Well, life insurance is pretty simple, but it really doesn't pay when you're alive. It pays only when you die. 2:13 So it could be called death insurance, but we call it life insurance. Get his more positive. But when you die, the life insurance writes a check to your family for the amount of the policy that you had in force when you died. Meaning if you've been paying for it every month and it's still active and you die, your family's going to get some money. 2:33 And that's a big thing. If you've never looked into life insurance before, that would be something you should do. According to this policy genius website that I can put a link in for (https://www.policygenius.com/life-insurance/life-insurance-statistics/ ) says about 52% of American adults have life. 2:51 Insurance, which is probably actually a little higher than I thought it would be, but not as high as it should be. 2:57 It says 26% of those adults have just through their group coverage at work, which often is not nearly enough to cover your full needs. 3:06 And when you leave that job because you will likely leave that job, you can't take it with you. So that leaves people typically 3:15 either underinsured or uninsured when they leave and may not be able to get a policy.
So you should look at this as soon as you can and make sure you have enough to cover. A good financial advisor can help you figure out how much you need, they should be able to go through a thorough needs 3:29 analysis. Because when you pass away, your family's going to have a lot of needs, right? They're going to need to pay for a mortgage. 3:39 To pay for their living expenses. You're going to need to pay to bury you and cover the funeral costs. You may have a desire to leave some money for your kids, for college. 3:47 You may have a desire to leave some money for charity. And if you have a spouse, they're going to need to help cover your lost income that was probably a part of your retirement plan.
3:56 So it's very, very, very important. And I get questions a lot about whether or not someone stays home with the kids, 4:06 so if you're a stay-at-home mom, if you should get life insurance. You absolutely should. There's data that says that women are about 11% less likely than men to have life insurance. 4:14 And I'm guessing that that accounts for a stay-at-home that maybe think they don't need any. But you do provide. 4:20 Obviously you can't calculate the benefit that you have when you stay home with your kids. It's hard to quantify. But economically you certainly do provide that economic engine so that your husband can go out and work when you're with the kids. 4:37 The house doesn't function without you there. And so just from a purely economic standpoint, you would need life insurance because your whole with the way that the money is brought into the house to cover the living expenses is going to be upended. 4:50 If you're not able to help take care of the kids. So you must have life insurance as a stay-at-home mom. 4:56 No if, ands, or buts about it.
And then if you're of course working husband or wife, you need to have life insurance as well to cover that loss of income because if you're no longer there to bring home the money. 5:09 The household shuts down. So it's incredibly important. And like I said, sometimes you also want to be able to fund other things like kids, college or charitable events. 5:23 Now, the other question that often comes now that we know why you should take care of that to make sure your family is taken care of. 5:30 It's often, you know, the, how do we do it?
If you've never looked into it, term insurance is the most common way to achieve that. 5:40 And for most of you term is what you would need. So term means that the policy is going to be in place for a certain period of time. 5:46 Typically that's, you know, 10, 20 or 30 years are the typical ranges of those term policies. And so again, you sit down with an advisor and map out your needs. 5:56 How long is this gap going to be for? The theory being that you would get term because you get a lot 6:04 of insurance for really not that much money. And then by the time that term expires, hopefully, your kids are gone. 6:13 You've saved a lot of money and you may not even need insurance at that point in time.
So when you're retired and you're living on your assets you don't need to cover your family anymore. 6:26 You may flip into at that point potentially needing some permanent insurance. This is very uncommon in my experience. And people that actually need it. 6:37 I know insurance agents are going to push that harder because they make a lot more money. But you don't need it in a lot of cases, unless you're maxing out all your retirement accounts. 6:45 You just don't have anywhere to put your extra funds. Or if you're shifting into retirement age, you want to build some sort of estate strategy. 6:54 Asset transfer strategy it can be beneficial in those instances sometimes. Sometimes they're helpful for businesses with certain buy-sell agreements. So there are use cases for permanent insurance, but for the vast majority of people, especially when you're young, you probably shouldn't even investigate 7:12 And just get a term policy. And you know, the general rule that you'll see out there is, you know, 10 to 15 times your income in terms of the face amount, how much you should get for coverage. 7:24 Again, you should talk to a life insurance agent, or financial advisor someone that's a professional that can talk about your specific situation. 7:31 But that's kind of a rule of thumb to kind of get you started, at least in the ballpark.
So I hope that helps. 7:38 And if you are needing insurance there's a lot of different ways you can go about it. You can get it online. 7:49 There's places that you can get it without taking a medical exam. You can talk to an insurance agent. You can talk to a financial advisor and figure out where should I go. 7:56 It can be kind of confusing. So if you're comfortable with doing it yourself, you can get it online. There's a lot of places now where you don't need to talk to an agent. 8:04 But most of the time to make sure you're getting the proper coverage it would be good to talk to a professional that's got experience on that. 8:11
So I would encourage you to do that. And please, if you, if you don't have it or if you suspect that you're underinsured and you just have a small policy at work, you need more. 8:21 Your family needs more. Man, I've seen it happen. I just talked to somebody the other day that, that had a life insurance policy payout. 8:28 Didn't think it was ever going to do it. And it paid out with about a year to go in the term policy. 8:34 So you don't know when your time's up, you want to make sure your family's taken care of. And this is one of many insurances that you should have. 8:44 And so if you have questions on that, please reach out. Hope that helps. And God bless.
*This is not financial advice, this is for education purposes only. Please speak to a financial professional that can assess your personal situation..
Please reach out to me if you have questions.
Phil Francois, CFP®
Foundation Wealth Planning
https://www.foundationwealthplanning.com/contact-us
phil@foundationwealthplanning.com