Life Insurance Awareness Month

Presented by Marc Aarons

September is Life Insurance Awareness Month. If you haven’t reviewed your insurance profile in a while, you may be surprised that what made sense in the past no longer fits your life.

Here are some ways to quickly evaluate your needs.

*Stop on a DIME – To use the DIME method, add up your Debt, ten years of Income, your Mortgage payoff amount, and the cost of your children’s college Education. This can provide a starting point for how much insurance coverage you may require.

*Look at Your Options – Do you need term life insurance (coverage for a fixed amount of time) or whole life insurance (a policy structured to last until you pass away)?

*Evaluate Costs – The price of a policy depends on your age, health, and the amount of coverage in the policy.

These methods can help give you a rough idea of where to start. But there’s no substitute for speaking with a financial professional, insurance agent, and estate planning specialist about the right approach for you.

After all, life doesn’t stand still, and neither should your life insurance policy.

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

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MMI Disclosure: This material was prepared by MarketingPro, Inc. for use by Marc Aarons.  Money Managers, Inc.; is a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.  

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Why Life Insurance Matters for New Homeowners
It addresses a significant financial risk.
Provided by Marc Aarons Money Managers, Inc.

If you buy a home and you have no life insurance, there is a financial risk. It may not be immediately evident, but it must be acknowledged – and it should be addressed.

What if you die, and your spouse or partner is left to pay off the mortgage alone? This possibility may seem remote, and it may be hard for you to contemplate. It deserves consideration regardless.

Imagine your loved one having to handle that 15-year or 30-year debt by themselves. (Or the debt on an adjustable-rate loan or jumbo mortgage.) Additionally, how would that heavy financial burden come to impact your children’s lives? These tragedies do occur and do bring these kinds of emotional and financial challenges. A life insurance payout may provide some help for a homeowner in the event of such a crisis.

When you buy life insurance, the coverage amount should reflect your mortgage debt. You will need enough coverage to help your spouse, partner, or heirs deal with the outstanding home loan balance, should you pass away prematurely.^1,2

Term life insurance may meet the need. If you are the typical homeowner, you will stay in your current home for about ten years. (Back in 2006, the average homeowner tenure was just six years.) As you may move up, move to another region with different home values, or even rent in the future, a term policy that lets you renew or modify coverage could suffice.¹

On the other hand, permanent life insurance may be more suitable. The reality is that inflation decreases the value of term life coverage over time. Suppose you buy a 20-year term policy offering $250,000 of coverage today. At just 4% annual inflation, that coverage will be worth 56% less in 2038 – and your home may be worth much more in 2038 than it is now.²

Moreover, the cost of term life insurance rises as you age. A term life policy is cheap when you are young, but if you want a new one after your initial term policy sunsets, you may find the premiums dramatically more expensive. In contrast, premiums on a permanent (whole) life policy are locked in, effectively becoming more manageable as time goes by. You may want permanent life for other financial reasons as well, reasons that have nothing to do with your home. A permanent life policy has the potential to accumulate cash value in the future; a term life policy does not.²

A homeowner should carefully consider life insurance coverage options. If you lack coverage today, talk to a qualified insurance professional about your options, so that you can insure yourself for tomorrow.

Marc Aarons 714-887-8000 or Marc@ocmoneymanagers.com

 MMI Disclosures

_Citations.

_{1 – themortgagereports.com/26307/homebuyer-tenure-how-long-are-people-staying-in-their-houses [3/17/17]}

_{2 – entrepreneur.com/article/310731 [3/22/18]}

^{3. Image Courtesy: https://www.cheapfullcoverageautoinsurance.com/}

_{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

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