Life insurance has many important applications, some of which complement and support a breadwinner’s active income stream.
Income Replacement
Perhaps the most straightforward application is for income-replacement purposes. I have written about this is greater depth elsewhere. (See HERE.) But, let me just sketch this for interested readers.
To put the idea in its simplest form, income replacement is where you match a death benefit to some multiple of an income earner’s yearly salary or wages.
For example, consider Sally, who makes $150,000 a year at Boeing. She’s 30 years old, married, and has 2 kids. Let’s say that her youngest child is 2 years old.
Although she doesn’t have a definite retirement date in mind, she will qualify for full Social-Security benefits around age 67. That gives her 37 years to work.
Between now and age 67, her family expects her to bring in $5.5 million: $150,000/year X 37 years.
Or again, her youngest can be expected to be finished with a bachelor’s degree in about 20 years. (These are all just rough projections.) Between now and then, Sally will have earned $3 million: $150,000/year X 20 years.
Of course, she has some group, supplemental term insurance through Boeing. Suppose that she has 6X her income, or $900,000.
Even with her group term, Sally might be interested in increasing her insurance amount, in order to cover her income for longer. Whether she wants to cover her earning power until the emancipation of her children, or all the way out to her projected retirement date, or something in between, getting private term insurance on her life may be a valuable addition to her family’s portfolio.
Life-Insurance as a Retirement Supplement
Another potential concept of interest is the so-called life-insurance retirement plan, or LIRP. Under this sort of plan, some sort of cash-value life insurance can be used as a supplemental vehicle, once other forms of retirement savings – like employer-sponsored plans (such as 401(k)s and 403(b)s), Traditional Individual Retirement Accounts/Annuities (IRAs), and Roth IRAs – have been, or are being, adequately funded.
However, a few St. Louisans work for smaller companies, or otherwise don’t have access to some of the usual, retirement-funding vehicles. A life-insurance-based plan may be right for some of these people as well.
Who Might Be Interested?
There are many major corporations in the area. These concepts may apply regardless of whether you work at Ameren, Anhesuer-Busch (Inbev), BJC, Boeing, Burns and McDonnell, Centene, Emerson Electric, Enterprise, Express Scripts, GM, Jones Financial, Mallinckrodt, Mercy Medical, Monsanto, Peabody, SSM, a state or private school district, or somewhere else.
Workers at any of these businesses, and many others besides, may have at least some interest in exploring their options or protecting their earning power for their families.
We understand the benefit packages of St. Louis’s local businesses. We can help you think through the relevant issues and make decisions that are right for your family and situation.
Call today for a no-cost, no-obligation review.
(636)447-1169