Does The Non-Breadwinner In The Family Need Life Insurance?

Recently I was reading an article on all of the reasons people fail to buy life, disability and other types of insurance. Apparently there are a lot of misconceptions floating about and I wanted to take the opportunity to hopefully correct these ideas. Taking them one at at time I hope to explain these misconceptions over the next few posts.

Last week I was talking with a couple who were doing okay financially. They realized that they were fortunate enough that one of them could stay home with their small kids while the other was the main breadwinner. In this situation, the wife worked and the husband stayed home and had a small consulting business, which by their estimation was "more of a hobby". I took that as meaning he didn't bring a lot of money into the household.

We discussed life insurance for the wife and ran the numbers to pay off the debt and replace her income for a few years. They both agreed that she needed to be covered. When I asked about the husband, there was a bit of confusion. "He really isn't contributing to the bills, so I don't think he needs a policy," the wife said.

The husband, who I thought would pipe up and say something, sat there nodding in agreement. I asked a couple of simple questions: If he were to die unexpectedly, how much would she need to pay for childcare? Or would she want to take time off from work to stay home with the kids?

This was obviously something neither had considered. Especially when neither of them had family nearby. The kids were young and only one was enrolled in school, so the other child would need to either be enrolled in a daycare or preschool, or they would need to have someone come into the home, like a nanny. 

When I explained what that kind of care costs, they were taken aback a little. I tried to ease their concern and let them know that a term life insurance would be much less expensive and, in the event of the husband's death, could cover the expenses for childcare plus his funeral costs, which they also failed to plan for. 

When a family member is not the breadwinner, it doesn't mean that they don't need life insurance. As a matter of fact, we even offer a disability policy on stay-at-home parents to help replace the costs of daycare. 

What are your thoughts? Leave us a comment below.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

5 Ways To Help Your Family From Beyond The Grave 2023

As an insurance agent I have come across a wide variety of opinions when it comes to people discussing their own deaths. I am constantly amazed at how people will open up with me so quickly. Maybe they trust an insurance agent more than their own family members.

Some of these folks believe they are heading into the afterlife, one way or another, while more than you would expect seem to feel that there is nothing after you die. But with all of these differing opinions, most do agree that their loved ones will still be around when they are gone and may have to pay some expensive bills as a result of their death.  

And here is the rub. If we agree that there will be some costs involved when we go to our great reward, shouldn't we try to minimize those costs ahead of time? Wouldn't it be in the best interest of our surviving family members? It seems like common sense to say "yes". Especially when we know that no one lives forever.

So what can you do to make sure your family doesn't go broke paying their last respects to you? Here are a few ideas of simple tasks that don't need to be put off any longer.

1. Have a will. Your will directs the courts to help settle your estate per your wishes. It's very important to keep it updated every few years as your situation changes. And most importantly, make sure your family members know where to find it. Is your will in a safe, or a file at your attorney's office? And never leave it in a safe deposit box unless other family members have a key. 
2. Have a living will. If you were seriously ill, would you want to be on life support or would you rather have the medical staff "pull the plug"? Your directives can keep your family from keeping you on life support when you would rather pass away.
3. Have a life insurance policy. As an attorney friend of mine always says, "A life insurance policy trumps a will." You don't have to wait for someone's estate to be settled because a life insurance policy is a binding contract between you and your insurance company. Remember that when someone dies, the funeral home, lawyer and others will have their hand out waiting to be paid. Your life insurance agent will be the one bringing you a check to pay those bills. 
4. Pre-plan your funeral. Instead of your kids picking out a Cadillac coffin, you can decide for yourself how modest you want your funeral to be. 
5. Pre-pay your funeral. My own father did pre-plan but didn't pre-pay. From the time he had planned his funeral to the time he actually passed away, inflation had done some damage. The funeral director shook his head and said, "I'll do the best I can on these prices", and I could tell it wasn't the first time he had run into this situation. 

This list may seem daunting, but it doesn't have to be. The first two items and the last two items can be taken care of at the same time. Having a plan and letting your family know what it is can save them substantial money and they will know that, even in death, you are looking out for their best interest.  

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Who Brings Your Family Money When You Die?

Last year when my father passed away, I found myself as the executor of his estate with many responsibilities. In addition to finding a realtor to handle the sale of my father's home and hiring contractors of various sorts for quotes and repairs, I was also on the hook for making sure bills got paid. Where was that money supposed to come from?

Unfortunately for me, my father had not updated the beneficiaries on any of his life insurance policies in over 40 years, which is insane and downright criminal. All of his named beneficiaries has died way before him, including my mother who had died nine years earlier. That left us creating his estate's bank account with the little cash that was in his checking account and waiting a few months for the policies to pay to the estate instead of his heirs. 

In that time, I realized that when someone dies there are a lot of people with their hands out wanting money. Here are a few: 

1. Contractors. As previously mentioned, we had to figure in the cost of repairs and upgrades to the house. Some we dealt with and others we passed along to the prospective buyers because they were just too much for us to afford.
2. Attorneys. Our attorney let us know from the beginning of the process what the estimated bill will be at closing, so I have to make sure that money is on hand when we need it.
3. Accountants. Be prepared to pay someone to handle your deceased loved one's tax preparation for up to 2 years (if they died before filing the previous years taxes plus the preparation of tax forms for the years in which they died), plus possible estate taxes. 
4. Funeral costs. I've mentioned before how my father pre-planned his funeral but didn't pre-pay. In other words he made a wish list. Inflation took it's toll from the time he chose his casket to when he would actually use it. 
5. Lien holders. This was one I didn't expect but a deceased person still may have debts to be paid off. My father was taking money from a Home Equity Line of Credit (HELOC) which we were unaware of until his death. We settled up with the bank after the sale of the house but I can imagine other people have all kinds of debts that need to be taken care of with cash.
   

Of course with everyone coming forward and asking for money was stressful, however the one bringing us money to take care of these things was the insurance company. When all the others have their hands out, one is bring the much needed check. 

Think about your family for a minute and consider them being in a situation like that. Having to handle funeral directors, lawyers and other bill directors while grieving is a tough situation to put them in. You can avoid it by making sure you have enough life insurance available for them to handle easily and without going into debt or needing a GoFundMe page. 

To help you determine how much life insurance coverage you need, we have included on our quoting software a calculator. It asks for numbers regarding your debts, including mortgage, as well as how much savings you have put aside. You may find out that you don't need as much as you previously thought.  

If you have questions about making sure your life insurance will ease the burdens on your loved ones drop us a note. In the meantime, please stay healthy! 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Is Selling Insurance Hard? Pt 2

In the previous post I went over a few facets of what makes selling insurance, life insurance in particular, a difficult job. There is a hesitancy from people to purchase something they know they need, but generally speaking, do not want to purchase. In essence, asking someone to add to their monthly bills to protect their family from financial ruin is a hard job.

One of the many objections agents get when selling life insurance goes something like this. "I want to talk to the wife (or my husband, partner, significant other) before making a decision. I may need a few weeks." Where do I begin?

First, I have rarely met a spouse who did not want to be named a beneficiary on a life insurance policy. And by "rarely", I mean never. As a smart agent once proclaimed, "Wives hate life insurance but widows love it." 

A few years ago I met a woman who was in dire financial straits. Her husband had left his well paying job to start his own business. In doing so, he borrowed some money to get his business off the ground. The wife was fully aware of the situation and insisted he purchase a life insurance policy to cover the debts he had incurred if he were to die unexpectedly. He told he would "get around to it." 

After a few months went by, he told his wife that he had bought a policy. She never saw the paperwork or a policy but assumed that he was telling the truth. Not long after, the husband was clearing out some trees near their home when a log fell on him, crushing him to death. 

You can figure the rest out. There was no policy. She couldn't afford to repay the debt and lost her home. She was forced to take a small apartment and, even though she had been out of the job market for a long time, had to take a job as a teacher's aide in a high school. When I spoke with her she broke down in tears several times from the stress that could have been avoided if her husband had just purchased that policy.

When someone says they'll get around to it later, I share that story with them. And I make sure that their spouse or significant other is present to hear it as well. 

The other objection I deal with is "I need a few weeks to think it over". The logic is that if I have a few weeks to think rationally I will decide if I need a policy. This is one of the most ridiculous things I have ever heard. Did they need a few weeks to decide on the purchase of a TV, cell phone or clothing? Or how much time did it take to decide to drop $7 on coffee, which they do often? 

Imagine someone dropping $50 each month on coffee but not wanting to spend $35 to protect their family. As stated previously, the priorities are all out of whack.

So when the prospect claims they need a few weeks, I let them know that the insurance company will also need a few weeks to decide if they will approve them and what the rate will be. I will encourage them to start an application which can be submitted with no money. "That way the underwriting process can begin and a paramed exam can be completed in the meantime. And by the way, we pay for the exam as well, so you won't have to pay anything until the insurance company has done their due diligence. And that process could take a few weeks," I say. "So while you're thinking it over, so is the company."

People think of insurance agents as being high pressure sometimes. Personally, I feel that the vast majority of agents are trying to do the best thing for their clients and sometimes that requires "good pressure". And in the end, the beneficiaries of that policy are thankful for the agent's work. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

4 Questions About Funeral Planning

Those of us who sell life insurance often talk about how a policy can benefit loved ones following the loss of a family member. If a policy is structured correctly to cover any outstanding debts, such as a mortgage or other loans, as well as replacing lost income and funding education needs if children are involved, that coverage should work well in the long run. 

However, the family will need those funds in the short run as well. First and foremost, funeral expenses will need to be taken care of as quick decisions are made by a grieving family. In a perfect world, we would all have pre-planned our funerals. Picking out a casket, having burial plots put aside and other decisions can best be figured out ahead of time when people are rational. 

This is why it's important to for your life insurance agent to include final expenses into the conversation. A traditional funeral can be expensive, averaging between $10,000 and $13,000, depending on where you are. To help you plan and save your family a lot of stress, I've come up with a few frequently asked questions about funerals and final expenses. 

1. How can my life insurance pay for the funeral?

If you have named a family member, let's assume a spouse, to be your beneficiary, they can "assign" a portion of the proceeds to pay for the funeral. The funeral home typically will have paperwork on hand for this so that the insurance carrier can pay them their fees directly. 

Keep in mind that the beneficiaries need to be up-to-date. In the case of my father, who had not updated his policies in years, all of his beneficiaries has pre-deceased him. As a result, my sister and I had to pay the funeral home and the policy paid the death benefit to his estate, which took months to settle. 

2. Does pre-planning a funeral save money?

Not necessarily. While choosing your items may help a bit, unless you pre-pay, the prices can go up. Using my father as an example again, he pre-planned his funeral but didn't pay for anything. When he died years later, inflation had an effect and the prices were a bit higher. 

I met a lady years ago who owned a local cemetery. I'm not sure if she was trying to get me to buy a plot but she said that inflation on burial plots were higher than regular inflation. If you are planning on being buried, you should probably choose the plot and pay for it ahead of time if you can.

3. Can I buy my casket online or do I have to get it from the funeral home?

You can purchase your casket and other supplies online. The funeral home can handle the embalming, host the viewing and coordinate other details. Be aware that they would prefer you buy from them as they have a lot of overhead and they markup their caskets and vaults accordingly. 

Under the FTC Rule, you are allowed to purchase supplies from a third-party vendor and the funeral home is required to accept them. 

4. What if I just want to be cremated?

That shouldn't be a problem. Many people have chosen this option as it is less expensive than purchasing a burial plot. Again, the best advice is to discuss this when pre-planning. 

The director of a cemetery told me once that the biggest issue he dealt with was that when people made plans for cremation, they often failed to inform their loved ones. Family members would expect to visit a plot that wasn't there. "They were expecting a place to stand together and grieve, but when they realized there wasn't one they would get very upset," he said. "I just wish they would tell their family ahead of time."

When discussing your life insurance with your agent, be sure to include your funeral and other plans into the talk. In the meantime, stay healthy!

 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! 

3 Frequently Asked Questions Life Insurance

Occasionally someone will ask me a question about insurance. More specifically, they ask about types of insurance and which is the "best" for them. After thinking about it, I have noticed that a lot of the same questions are asked, so I thought I would take the opportunity to help everyone with some broad stroke answers. Keep in mind that these are fairly generic answers and if you need a more specific answer to your situation, let me know. 

1. What is final expense insurance?

Final expense life insurance is exactly what is sounds like. It is designed to pay for expenses associated with dying, specifically funeral costs. A funeral can cost around $10,000, but that is just an average. Be aware that there are other costs associated with death, such as a hospital stay. I recommend to our clients that they insure themselves for maybe $15,000 instead, just to make sure their loved ones are not having to come up with those unexpected expenses out of their own pockets. 

Most final expense plans are comprised of whole life insurance, which can be expensive. Since whole life insurance typically builds cash value which is unnecessary for what the need is, you may be able to find another alternative. If you are healthy and can make it through a medical exam, you may want to consider a guaranteed universal life (GUL) policy. These policies don't build any cash value, but can be a lot less expensive. GUL's are guaranteed to be there for you as long as the premiums are paid.

2. Should I buy life insurance to cover my children? 

Yes! For some reason people think that putting life insurance on a child is a horrible thing. "I just don't want to think about my child dying" is the common refrain. Neither do we, but it does happen. As I mentioned in a recent post, it is sad enough watching parents suffer through the loss of a child, but it's just as bad attending a fund raiser to pay for the funeral.

A permanent policy that builds cash value is appropriate in this case. And it can be very affordable since the child is young and healthy (I assume most kids are "non smokers"). And when your child is older you can transfer the ownership of the policy to your now adult child, who can continue to pay the low premiums, or cash it out if they need to. 

A side note: Most insurance companies frown on large face amounts for children's life insurance. Generally speaking, $25,000 or $50,000 is more than enough and the underwriters will ask a LOT of questions if the policy is for more than that amount.

3. Do I have to keep my beneficiaries the same?

Absolutely not! As a matter of fact I recommend you review your life insurance every few years. Part of that review should be updating your beneficiaries. Changes in circumstances may lead you to decide to change your beneficiaries. Perhaps your current beneficiary has pre-deceased you, or your child isn't as responsible as you had hoped for. 

I had one client who was widowed and her only child was incarcerated. She felt as if she was paying for insurance that would benefit no one. I asked her if there was a charitable cause that she was interested in and she said her church was always in need. We managed to change the beneficiary to the church with enough put aside to cover her final expenses. 

Keep in mind that beneficiary changes can be made at any time, but some companies do require a "wet" signature, which means you may not be able to do it over the phone or online. 

If you have questions about life insurance, drop me a note in the comments section. And if you would like a quote you can click here and run your own. In the meantime, please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!