What You Should Know About Life Insurance

 

My name is Grant Griffith, I live in Grove Hill. I have been in the financial services industry for ten years and have earned the CLU (Chartered Life Underwriter) and ChFC (Chartered Financial Consultant) designations that assist me in working with those who are seeking guidance in the areas of financial planning and wealth transfer.

Do you know only four in ten adults own individually purchased life insurance? Of those who have coverage, the policy only averages three years of replacement income. A recent study of widows and widowers whose spouses died prematurely (between the ages of 30 and 55) found that less than twenty five percent felt their spouse had adequate life insurance coverage.

Life Insurance should be the foundation of a financial plan and should protect financial resources. Life insurance generally passes to the beneficiary free from income taxes. The money is used to pay off debts, help pay the mortgage, and avoid the selling of assets to pay bills and taxes. In addition to providing an income that would otherwise be lost, it can also be used for retirement and college tuition. Life insurance in businesses is used for Key Man coverage, Buy-Sell Agreements, business continuation, and to equalize inheritances.

Grove Hill Clubhouse Rental

The general rule for the amount of coverage is eight to ten times your gross annual income but one should analyze specific needs and human life value. Human life value is the earning potential if one was to remain alive and provide income for the family. Calculate immediate needs such as taxes, funeral costs, and final medical expenses. Also calculate ongoing needs: monthly bills, utilities, expenses, day care (especially on coverage for stay at home mom). Then figure for completion of college and retirement funding. Monthly savings for these would stop if you were not there to save!

There are two forms of insurance, Term and Permanent. There are many opinions on which is best. I say to review both and decide for yourself. Term is very inexpensive but only provides coverage for a pre-determined period of time. It is good for those just starting out or those with a temporary need. The advantages of term are that the initial premiums are low. This allows for the purchase of higher face amounts when coverage is needed most. The disadvantages are that the premiums increase or worse, the coverage ends after the original "term". There are no values and missed premiums will cause the policy to lapse. The other form is permanent insurance. There are different types but the concept is much the same. The advantages are that the premiums are fixed or flexible depending on the plan. The policy is designed to maintain level premiums for the life of the policy. The policies accumulate a cash value tax-deferred and can be accessed for a variety of life events. The policy can also be designed to have the dividends or cash value to pay premiums. If you no longer need the coverage, policy values can be surrendered or turned into income. The disadvantage is a higher initial premium. Permanent insurance is purchased for the long term. I generally tell people that term is if you die prematurely, and permanent is for when you die.

Grant Griffith CLU, ChFC
1664 Olivia Way
334-301-0633

Did you know you can rent the clubhouse and/or swimming pool for a party or special event? The cost is $100.00 for the clubhouse and $25.00 for the pool. Please visit www.grovehillhoa.com for rental guidelines and reservations forms. Once you’ve completed your forms, contact Grove Hill Property Manager, Barbara Arington at 826-5884 or at barbara@grovehillhoa.com to book a date.