Protecting your family through uncertainty

Consider how insurance fits into your financial plan

A common question I get from clients, centers around their need for life insurance. The answer depends on a variety of factors including dependents, income, total assets, and liabilities.

For clients in their 20s to 40s life insurance is a tool to replace income and payment of debts. A household with one bread winner, young children, and a mortgage has the largest need for insurance. Premature death can cause financial ruin for many families. Start with maximizing the insurance provided by your employer. Most companies will give you $50,000 as a base benefit.

For clients in their 40s and beyond: Life insurance could be used to pay estate taxes, provide heirs with liquidity, or pay for a business ownership buy-sell agreement. If most of your net worth is tied up in real estate or your business, you may want to provide your heirs with some liquidity so that they are not forced with a sale decision. If your estate is beyond the estate tax exemption amounts ($11,700,000 for 2021) you may be subject to Federal estate tax. Structure your life insurance coverage to ease the potential burden of estate taxes through estate planning.