August 2020 Living Debt Free and Wealthy Newsletter

Demystifying the Myths About Life Insurance
The prospect of buying life insurance is intimidating. After all, it forces you to think about your death, which is not something anyone wants to do. Because it is an often-taboo topic, there is an unfortunate amount of misinformation and misconceptions surrounding this valuable tool. It doesn’t matter if you are single or have a house full of children, there are very few individuals whose families won’t benefit from a financial safety net. Here, we will clarify some of the most common misunderstandings about life insurance and the financial impact of death.

I am single and make good money, so there is no reason to pay for life insurance.

This is one of the most prevalent reasons that single people don’t buy life insurance. But, a funeral is expensive, and your loved ones are the ones left footing the bill. Even if you leave behind a hefty bank account, your family may not be able to access your money, and there may be disagreements about who inherits your assets. At the very least, you should consider a small life insurance policy to cover your burial and funeral expenses. Make sure to designate a primary and contingent beneficiary.

My family cannot afford to pay taxes on a death settlement.

Beneficiaries are usually not required to pay income taxes on a death benefit. They will, however, pay taxes on interest received and on any interest, the money gains over time.

I’m in debt, but they can’t collect if I’m dead.

This is absolutely untrue, and companies, corporations, and even individuals to whom you owe debt have a legal right to collect from your estate. Debt doesn’t just go away if you pass. Instead, like your money or property, it is essentially inherited. Usually, this involves probate proceedings and the judge appoints an executor to first pay off any outstanding money that you owe before distributing your assets to your loved ones. Even if you do not have property, keep in mind that even things like vehicles and valuable collections may have to be auctioned off and sold to settle what you left behind. Having a life insurance plan in place will prevent the people you love the most from watching everything you owned get picked apart and, potentially, lost forever because of debt.

There are no benefits to life insurance to me while living.

Depending on the type of policy you have, there may be plenty of benefits that you can use during your lifetime. Many life insurance policies will allow you to take out a loan of up to 90 percent of its cash value. If you die before the loan is repaid, the payout is simply reduced by that amount. Keep in mind that this is a great strategy if you need a down payment on a home or to pay for college but your credit is less than perfect, as interest rates are low and you don’t have to prove creditworthiness or ability to repay the loan. Life insurance is not only for married thirty-something’s with children and a mortgage. Everyone can benefit from having financial protections. If you are still unsure, give me a call. I am happy to answer any questions and help build a plan that’s right for you. 

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"He who knows nothing is closer to the truth than he whose mind is filled with falsehoods and errors." 

-Thomas Jefferson



Interesting Facts:

-The verb “cleave” is the only English word with two synonyms which are antonyms of each other: adhere and separate.

-In 1895 Hampshire police handed out the first ever speeding ticket, fining a man for doing a blazing 6mph!

-The average person walks the equivalent of twice around the world in a lifetime.

-Laughing lowers levels of stress hormones and strengthens the immune system. Six year-olds laugh an average of 300 times a day. Adults only laugh 15 to 100 times a day.  

Our Nation is In Trouble

We have a very serious problem in the United States that is going to affect all of us.

In 1975, as a nation, we were among the best savers in the world, saving over 9% of our incomes, annually.

Consider, aren't the peak savings years from age 45 to 65, when most people's children are grown and out on their own? If this is true, then weren't the people who were doing most of the saving in 1975, now retired?

Yet, everyday, don't we still see and hear about retirees who are struggling just to survive?

How many retirees do we see every day that are working at grocery stores, just to make ends meet? How many retirees are forced to live with their children and friends?

Aren't today's retirees from the generation of the best savers in the world?

Do you want to live that way during your retirement?

Most of us don’t! So act now and start a Retirement Savings Plan!

You can start a Retirement Saving Plan for as little as $25 a month.
Deductibles, What are They Worth?
Renters, Health, Homeowners, and Car insurance…What do all of these have in common? A lot actually, but the topic for today is that they all have deductibles. What is a deductible though, and how do you choose the right one? In an insurance policy, the “deductible” is the amount that must be paid out of pocket (by the policy holder) before an insurance provider will pay any expenses.

So how do you know which level of deductible is best for you? (Ignoring health insurance, as it is much more complicated) choosing the right deductible comes down to three simple, yet imperative questions. First, how much is the price difference between the coverage for the different deductibles. Second, how often do/will you file a claim? Third, how much do you have in savings?

How different is the price between the policies with different deductibles? To answer this, you will need to have your agent run the numbers for you. You may be astonished at the difference in prices. The difference could be as little as $10/month, as much as $150/m or it could be more! The important thing to determine is how much money could you save each month? Keep that number in the back of your head for a minute as we go through the other 2 questions.

The next question is, how often have you filed in the past, and how often will you file a claim? Is it homeowner’s insurance that you have never filed a claim in your life? 

Is it an automobile policy, and you have a teenage driver who has wrecked three times in the past year? It is important to use realistic numbers, not optimistic ones. The important thing you need to determine is how often will you be paying your deductible? The last question is, how much do you have in savings? How high of a deductible can you afford to pay? Do you have no savings, and will be financially crippled if you must pay a $1,000 deductible? What happens if you must pay it twice? Do you have large savings and can comfortably pay the deductible with no stress? This is important, but also you should realize that the savings you can get can help you build this up.



Like most matters in life, there is no “one size fits all” best solution for everyone. Everyone’s situation is different. For help choosing the right deductible for you and your family, give me a call today