Why is life insurance essential?

Preparation for Unexpected Death

Firstly, to ensure that your family's finances are stable and solid, you need to secure funds after your death. Secondly, you must ensure your family members can maintain quality of living without a steady income for several years.

Only way to guarantee the above is with life insurance.

Preparation for the Federal Estate Tax

There are two things which are not evitable in life. Those are death and tax. Death always leaves financial problem for those who 'die too early without preparation' or those who 'die late without preparation'. Both two cases could cause a financial burden on your family.

Most people know that succession to property only happens at your death but this is not true. As a matter of fact, Asset Management is more important and it can be improved during life time, gives stable finance when retirement, and ensure good succession at your death.

Amount of Life Insurance

Amount of life insurance is defined differently for everyone; however, we can calculate by considering such things as: house loan amount, children’s education fund, 3~5 years of expense, funeral expense, and estate tax.

For example, if house loan amount is 200K, 2 children's education funds (100K each), income (80k per year) then, 200K + 200K + 300K + alpha = 700K ~ 1M life insurance is needed.

Confirmation of Your Current Life Insurance

Do you know your life insurance plan in detail? You should know if your insurance is term, or UL (Universal Life) or VUL (Variable Universal Life). If it is term, do you know how long your term insurance covers? If it is UL, is the amount of Death Benefit guaranteed?

Term insurance: You can decide the period of insured such as 10, 20, or max 35 years (depending on your age)

UL (Universal Life): Whole life insurance

VUL (Variable Universal Life): A whole life insurance but a part of the amount is invested in the stock market. (The Death Benefit amount is not guaranteed)

If someone was insured before 2005, then there is a 90% of possibility of them having a non-guaranteed insurance plan, which means that they might have to spend more money to ensure the amount of their insurance benefits. Because of this, you should check your insurance plan and change to a guaranteed plan while you are healthy.

If someone was insured in the 90's, specially with UL/VUL, they might be able to change their non-guaranteed plan to a guaranteed plan with the current accumulated cash value.

Other Benefits

If you put more monthly payment, you can use Cash Value for your children’s education or your retirement.

If you have a limited time to live whether by terminal illness, you can withdraw up to 50% of your insurance amount (maximum of $250K) in advance.