Your Money 101. Is a Financial Needs Analysis Important for Buying Life Insurance?
Certainly! When considering life insurance, performing a financial needs analysis is crucial to determine the appropriate coverage. Here are the essential steps that Woodfork Insurance Services will help you to take to get the best insurance product for your needs:
- Identify Your Immediate and Ongoing Expenses With a Financial Needs Analysis:
- Start by assessing immediate financial needs. Consider outstanding medical bills, funeral costs, and other immediate expenses.
- Next, evaluate ongoing expenses such as mortgage payments and outstanding debts.
- Anticipate Future Expenses With a Financial Needs Analysis:
- Look ahead to future financial requirements. These might include sending children to college or other educational expenses.
- Consider whether your children are likely to pursue advanced degrees, as this impacts the cost of education.
- Assess Your Economic Value to Your Family:
- Life insurance companies often calculate coverage based on your lifetime economic value.
- Answer questions such as:
- How old are you?
- What’s your pre-tax income?
- What value do you provide to your family (e.g., childcare, lawn maintenance)?
- How much do you pay in taxes?
- What employee benefits do you receive?
- At what age do you plan to retire?
- How much do your beneficiaries need for necessities like food, clothing, and transportation?
- Consider Investment Potential:
- A good needs analysis also accounts for the potential investment earnings from the life insurance death benefit.
- Be honest in your assessment, as the accuracy of the analysis depends on the information provided.
Remember, understanding your financial needs is essential before selecting a life insurance policy. Woodfork Insurance Services can help you to implement these steps and make an informed decision that will align with your short, and long-term goals. Call 858-480-5546, or 833-480-5546 today to create a plan that works for you!
