Many people know that life insurance can be very important for the family that you leave behind in the event that something should happen which would lead to your early death. Yet many people do not have life insurance, they are under insured, or they have taken the wrong type of insurance to meet their financial goals.
Becoming familiar with the particulars about life insurance is important if you want to secure your family’s financial future. This is not only due to the money that will be paid out after your death. You can also use the life insurance policy as a valuable investment and financial planning tool in the event that you do not pass away for many years.
Educating yourself about life insurance ensures can help you make the best decisions to protect your family's future. Use this worksheet as a starting point to find out how much you really know about life insurance and get started thinking about this important topic.
Life Insurance Basics Checklist of Action Steps
1. Do you believe you need life insurance? Why or why not?
2. List 4 insurance companies you would like to investigate. Then review their customer reviews and their financial strength figures.
3. Now, jot down the names of the top 2 life insurance companies, based on what you discovered from completing #2 above.
4. Next, calculate the amount of life insurance needed, using the tables below:
Table A-Calculation of Total Funds Required Upon Death
Funds Required by Your Family
Your Income $ _____________
Surviving Spouse’s Total Costs per year ____
Your Family's needs for next ______ years
______ years x yearly income $ ________________________
Outstanding balance on mortgage+ ______________________
College for ____ children +______________________
Your Funeral Costs ______________________
Total Overall Costs = $ ______________________
Table B-Calculation of Total Assets to Subtract from The “Total Overall Costs” in Table 1.
Assets Your Family Will Have In Your Absence _______
Amount to Subtract From Surviving Spouse's Total Costs
Total Overall Costs (last line from Table A) $ ________________________
Social Security Survivor Benefits for Spouse & Kids
(For example, $12,000 per year in benefits)
_____ years x social security payments- ______________________
Current Savings (money in bank account) - ______________________
Retirement/Investment Savings - ______________________
Life Insurance Needed = $ ______________________ *
*This figure assumes the surviving spouse will be able to support him or hersel upon retirement and doesn't include funds for retirement years.
5. Describe in your own words the benefits of the various types of life insurance policies.
Term Life: _______________________________________________________
Whole Life: ______________________________________________________
Universal Life: __________________________________________________
Variable Life: ___________________________________________________
Survivorship Life: ________________________________________________
If you don't know the difference, you need to find out.
6. Name 2 ways you can use your life insurance policy as a financial tool.
7. Name the 3 general ways you can receive life insurance payouts. How are they different from one another?
8. List and describe the different types of annuity payouts for life insurance beneficiaries.
9. List your beneficiaries with full details and be sure it is in a safe but accessible place in the event of your death.
10. Review your life insurance coverage each year to ensure that it is in line with any changes that might have occurred in your life since the last time you checked the policy.
If you don't have an insurance policy, or think insurance is a waste of time and money, you might want to think again for the sake of your family, in case the unthinkable should ever happen.
Evelyn Trimborn - Evelyn Trimborn is a freelance writer who frequently contributes to a number of blogs, including: healthful-goddess.com, ...
