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Life Insurance at Work

by Life Insurance

Life Insurance

Hey everyone, welcome to the Bravo Insurance Agency blog and thank you for your time and hope all is well!  I want to keep on the same topic that I last wrote about and that’s life insurance. It’s the most important insurance policy you can get.  It helps to make sure your family is protected financially if God forbid something happens to you. Ask yourself, what legacy do you want to leave behind?

A common thing I hear when I bring up life insurance with people is “I’m all set, I have some through work.”  That’s fantastic! What a nice benefit to have and that is so great to work for a company that takes care of its employees.  I recommend getting as much of it as you can because it’s super cheap. But why is it so cheap? Well, because you don’t own it and it’s owned by your company.  That means… they can do whatever they want with it! A perfect example is what happened with Sears a few weeks back (March 2019). The company was struggling financially so in order to cut costs they abruptly ended life insurance benefits for 90,000 people.  That’s 90,000 people who can no longer protect their families financially if something happens to them (unless they did the smart thing and purchased a policy outside of work that they own themselves). All because a giant company wanted to cut costs. The problem with life insurance at work is you are depending on someone else to take care of your family.  You don’t have control.

When you purchase a life insurance policy through an insurance company, you own it.  You have the control and you call the shots. There are two different types of life insurance: term and cash value.  I wrote another blog post that goes into those different types in detail, so check that out to learn the difference or talk to an insurance professional.  Your policy with work should supplement a policy owned by you, not the other way around.

Here is the fine print for most life insurance policies offered by companies (aka group life):

  • The amount is limited.  How much do you have? A lot of people don’t even know.  A typical amount is your annual salary. But, have you gotten a raise over the years?  Is your salary the same now as it was when you first started? Does your life insurance at work keep up with raises and bonuses you get?  Hmmm, great questions you should ask. A lot of companies limit how much coverage you can get.
  • Coverage types could be limited.  How does your policy through work cover you?  Is it going to cover you if you die for any reason?  Is it just accidental death? Does it cover you only if you die on the job?  There could be some fine print, ask your company for more details!
  • It can go away!  What happens if you change companies?  What happens if you decide you want to pursue your passion and change careers altogether?  What if you want to leave your corporate job and pursue your passion for painting? Can you take the policy with you?  Usually not! Think about it like your health insurance with work. If you change jobs you can’t bring that with you. With your health insurance you can apply for Cobra but can you guarantee that you’ll be eligible for life insurance?  What if you have a health issue creep up? All good things to consider and think about.

Life insurance through work is a great benefit.  Take advantage of it because it’s super cheap. Don’t depend on it though!  Use it as a supplement and a secondary policy. Talk to an insurance professional and do a full assessment on how much you actually need.  We can help with that too and we do free life insurance assessments all day long. Don’t end up like Sears and make sure you protect your family and leave the positive legacy behind.

Thanks everyone for reading and for your love and support.  Cheers!

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Term vs Cash Value Life Insurance

by Life Insurance

Life Insurance

Hey Everyone!  Hope all is going well with all of you.  I want to write about a topic that as you may know by now, is super important to me and really hits home.  This is going to be on life insurance of course. If you haven’t already read my post about life insurance and why everyone needs it, definitely check that out.  I tell personal stories about events that have happened in my life and how life insurance either was a saving grace or a giant detriment. I definitely think you’ll get some value out of that one.

In this post, I want to explore the two different types of life insurance that are out there.  You hear a lot of things about life insurance and how important it is and what not, but how does it actually work?  You may think okay, yes if I die then my family gets money. Well yes that is correct, but it can also be so much more!  In fact I was sitting down with two clients (a husband and wife) about a month ago and was explaining the different types of life insurance that we offer.  I was talking about cash value life insurance and she asked “so in this proposal you’re showing us, if something happens to one of us, the other is going to get not only the death benefit, but also any money in that separate account?”  “Yes that’s correct” I replied. Then she said “well, okay then it’ll basically be reported to the IRS and our accountant will let me know what I’d have to pay in taxes for the next year right?” I told her “actually no, there are zero tax consequences with life insurance so your beneficiary will get the death benefit, the money in the separate cash account and not pay a dime to Uncle Sam.”  Her response (which was absolutely priceless in my opinion) was “Holy shit, that’s wild! Done we’re doing this and I don’t know why everyone doesn’t do this!” Needless to say after that (she is the wife so we all know she makes the decisions) her and her husband purchased a policy to protect each other.

So on that note, what are the different types of life insurance out there?  It can really be broken down into two categories: term life insurance and cash value life insurance.  That’s it, pretty simple. There are several different types of term and cash value life policies but that’s a conversation for another day or to have with your agent.  For the sake of simplicity, I’m going to break down what term and cash value life insurance are and the differences between the two. The easiest way to think about it, is the difference between renting a home vs owning a home.  

Term Life insurance (Renting)

When you rent a home it’s pretty cut and dry right?  You have your lease and you pay your rent each month.  The benefit you get for paying your rent is a place to live.  When renting a home, your lease is going to give you a specified period of time to live in that house.  Whether it be a year, two years, month to month etc you have a specific time period stated in your lease.  After that lease is up, you most likely will have the capability of continuing that lease or signing a new one for additional time.  However you don’t build equity in that home, it’s not your asset and the rent checks don’t go anywhere except for the privilege of living there.  It’s a roof over your head, end of story. Pretty cut and dry.

Term life insurance operates in the same way.  You have your period of time, which is typically anywhere between 10 and 30 years.   You pay your premiums each month for that life insurance. If you were to die, then your beneficiary gets a check (tax free) for the amount of coverage you have in place.  When the term is up, then you have the ability to renew it annually but at a much higher premium, which is determined based on your age at that present moment. Like renting a home, your monthly premiums don’t build any equity or cash.  It’s straight life insurance, you pay premiums, if you die then your beneficiary gets a check for the death benefit. Pretty cut and dry like renting a home.

Cash Value Life insurance (Owning)

When you buy a home it’s more expensive than when you just rented.  You have other factors like property taxes, closing costs, higher insurance costs, maintenance expenses when things go wrong, etc.   However, what’s the trade off? It’s YOUR home and it becomes an asset that you get to keep. You can build up equity in that home that you can borrow against or sell at a later date that puts money in your pocket.  

Cash value life insurance works the same way.  It is more expensive than term insurance. The reason is because your premiums go to two places.  One is to pay for the life insurance itself, and the other goes into a separate account that is going to build up cash over time.  It’s an asset that you get to keep and if funded properly, won’t expire like a term policy. The cash value will increase over time (again if funded properly) and you can use that money for whatever you’d like.  We have clients that have used it for retirement, for a form of savings, for whatever you need. In fact I used money in my own cash value life insurance policy to help pay for a portion of my wedding! It’s great, I got a check and wasn’t taxed a dime.  

So, which type is right for me?

When deciding on the type of life insurance that could be right for you, I always tell clients it depends on two things.  Number one is what are you trying to accomplish by purchasing life insurance and number two is your budget. There are many variables when determining the right type of life insurance so I highly recommend talking to your local agent or setting up an appointment with us to start a conversation.  Just like everyone has unique fingerprints, everyone has unique needs tor life insurance. It isn’t as cookie cutter as car or home insurance. We have clients that have only term, only cash value and others that have unique blends and combinations of both. Again it all depends on what you’re trying to accomplish by purchasing life insurance and what you can afford.  The goal here is to just bring awareness for the different types. I will post future stuff and dive a little deeper on different types of term and cash value but for now I’d highly recommend talking to a professional to learn more.

Thank you all for taking the time to read and for the continued love and support.  Remember we’re always here to help!

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Life Insurance – Why do I need it?

by Life Insurance

Life Insurance

Hey everyone. Christmas is right around the corner and it’s always a great time of year.  We’ve got the holidays coming up, NFL is heating up, we got the college football bowl season upon us and the NHL and NBA are in full swing.  What a wonderful time of the year!  Not to mention the best part, spending time with loved ones and reflecting on everything you’ve been blessed with.  Something we often take for granted.

A topic and thought that is absolutely terrifying for a lot of people is the thought of not being here anymore.  Passing away is an awful reality for all of us and none of us know when our number is going to be called.  Although a scary thought and not a comfortable one to think about, it’s always best to be prepared for the unexpected.  Just like you want to be prepared for unexpected things like a car accident, a fire in your home, and so forth, you want to be prepared and set your loved ones up if god forbid you didn’t make it to tomorrow.  Life insurance is the most important thing we offer and the most important insurance policy you can buy.  It will replace your income if god forbid something happens to you so that your family can be financially stable after you’re gone.  It doesn’t make the pain of losing someone go away, but i can tell you from personal experience, that it removes stress when you lose a loved one.  Money is something a lot of people stress about and the last thing you’d want to do when grieving over losing a loved one is have to throw financial stress on top of it.

I’m rambling a little bit about this but I’m just so passionate about this topic.  I’ve seen it go both ways: losing a loved one with and without proper life insurance.  My father passed away unexpectedly at the young age of 59, leaving behind a 58 year old wife and two kids.  He knew the importance of having a plan in place and because of his selflessness and proper planning, my mom never has to worry about money or work again.  She can think about him in the best light and remember the good times and live her life on her terms and however she wants.  Thank you dad for doing that for us and for taking care of us.

I also had a friend lose a loved one who didn’t have life insurance in place.  They had to use a go fund me page to try and just pay for his funeral and there is just so much uncertainty that it’s completely sad and horrible.  All because he was the primary bread winner and now he’s gone.  Do I have to go back to work?  How am I going to make this house payment by myself?  What about my kids and their college tuition?  What about all of my other bills?  These are all questions his widow is asking herself because the unexpected happened.

This isn’t something you often think or even want to think about quite frankly.  The reason I bring it up is well, it’s my job.  That aside, these things DO happen and doing what I do, I see good things happen to the best people on a daily basis.  Having life insurance is the most important thing you can do to protect your loved ones.  Even having some through work is better than having nothing at all.  I do suggest always owning some on your own because life insurance with work is often volatile and can be discontinued at any time by most employers.  Whether it be giving us a call to get a quote and get more information or doing some research and getting some on your own, it’s ALWAYS a must to get life insurance.

I’ll post some future stuff on more life insurance details and the difference between having your own policy vs just having it at work but for now, just know it’s beyond important and give us a call if you have questions or want some help.  Bye for now and thanks for reading!

Cheers!  -Ryan Bravo