Protecting your Family’s Financial Future
While Life Insurance clearly does not replace your goal of building your financial security through investments, it is an important part of protecting your family’s financial future and should be viewed as such. You first have to protect what you have, and build from there.
Your family’s financial future could be seriously impeded, if not destroyed, if one of the adult members of the household were to die unexpectedly.
Once you realize the importance of having this protection, you then have to decide how much is appropriate, and just as important, affordable. In today’s world the ideal is having a policy large enough to conservatively replace the major breadwinner’s financial contribution to the family. And, let’s not forget about a non working spouse’s financial contribution to the household which has been conservatively estimated at @$35,000 per year. The amount of mortgage debt, and the cost of the children(s) college education are other items considered vital to the amount of coverage.
Among the two types of Life Insurance available (temporary or permanent) the least expensive is Term (temporary) coverage. When your children are minors (up to age 18) and/or the mortgage debt is large (for new homeowners), Term is an economical tool to provide the larger protection you need during these years. However, 98% of Term is not in force when it’s needed, as most live through the term, allow it to lapse, or cancel it when times are tight. Term is also not as available in your later years as the cheaper premiums do not offset the mortality risk to the insurance companies. Then you will need to consider a permanent policy (Whole Life, Universal or Variable Universal). If possible you want to buy this as young, and inexpensive as possible.
When weighing the amount needed against the amount affordable, I always start with the premise that something is better than nothing! You should consider what the family can afford, on a monthly basis, and work from there. If there is Group Life coverage available at work it is an excellent option to augment that which you can afford personally. But, if you leave that job, in most cases you can’t take it with you, and it is usually not more than 1 or 2 X salary. So it alone is not enough, particularly in California, to provide for your family’s security.
I have come across some who do not “believe” they need Life Insurance because they have plenty of assets to protect the family should a parent die. This may well be, but if one has the assets to protect their family, and can easily afford to provide the means for the funeral for one of such status, wouldn’t it be a better use of those assets to provide a Life Insurance benefit to cover the funeral expenses (at pennies on the dollar), than require the family to use them for their farewell services. If your finances are sufficient, consider buying, as soon as possible, a small permanent policy to bury you, and make up the balance of what you need with term coverage while your need is greater.
Call Corrin to discuss this and other insurance needs. Protect your family! 1.650.FARMERS or ctrowbridge@farmeragent.com.
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Homeowners vs. Condo Insurance
The two different types of home ownership are reflected in the differences found between Single Family homeowner’s insurance policies and Condominium homeowners Insurance. Single Family homes are owned entirely by the Homeowner, including the dwelling structure as well as its contents. Condominium homeowners own their property from the Walls in, with the exterior Walls, and Roof, being owned by the Condominium Homeowners Association.
Single family Homeowners need protection for the whole dwelling in their policy, whereas condo owners generally need to only protect their personal property and any internal improvements that might not be covered by their Homeowners Association insurance policy. Condo Homeowners need to read the governing CC&R (Codes, Codicils and Restrictions) of their Homeowners Association to see for themselves just what is covered by the Associations policy and what is their responsibility. Hopefully the following will generally simplify this question: (X means applicable)
| Single Family | Homeowners Insurance |
Condominium Homeowners Insurance |
|---|---|---|
| Dwelling | X | - |
| Personal Property | X | X |
| Loss of Use | X | X |
| Separate Structures | X | - |
| Liability | X | X |
| Medical | X | X |
| Building Improvements | - | X |
Since many Condo Association policies cover only the exterior of the building, if the Condo Homeowner wants to have protection for the investment they may have made in interior upgrades, or improvements, they should make sure to add this coverage to their condo policy. But, because they don’t need the Dwelling or Separate Structure coverage’s found in Single Family policies, Condo policies tend to be a little less expensive that Single Family Homeowners.
All the other similar coverages (Persona Property, Loss of Use & Liability) require the same consideration in both the Singe Family and Condo Homowners policy. However, your Liability coverage, in a Condo policy, also has the possibility of your neighbors suffering a loss from a fire caused by your unit, more so than in a Single Family Home fire.
If you have any questions feel free to email them to me (ctrowbridge@farmersagent.com) or call me at 650-FARMERS!
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