Is life insurance right for your family’s financial plan?

October 6, 2014
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      With the right expert advice, life insurance can serve as the foundation of a sound financial plan. While life insurance can help you protect your dependents, it can also serve to provide liquidity for your business, family estate or heirs.

     “Life insurance creates liquidity for a business that doesn’t have available cash, creates dollars for estate taxes and works to create wealth for your family,” says Larry A. Harvey, Founder and CEO of HFG Wealth Management, LLC. “What life insurance does is assist to create wealth so your family’s lifestyle doesn’t change. Life insurance allows you to keep your standard of living so your family stays together as a family unit with the same standard of living,” continues Harvey.

     Life insurance provides immediate liquidity and works to protect your family’s future. It can also be used to assist in providing liquid assets of a family’s estate. “Most life insurance is cancelled before it is even used; it is the most underused financial planning tool for families and businesses today,” Harvey says.

     There are two major types of life insurance: term life insurance and whole (or permanent) life insurance. As the names imply, term life insurance covers you for a set period of time while whole life offers coverage for your entire life.

Term Life Insurance
Payment is received only if death occurs during the term of the policy so consumers choose a period of time, generally from one to 30 years, when they most need protection. Some choose to insure themselves for the life of a mortgage while others want protection for the number of years they will have dependent children. According to the III, the most popular type of term insurance is 20-year term.

Whole Life/Permanent Insurance
Whole life, or permanent, insurance pays a death benefit when you die. There is also a savings element attached to these policies that can grow on a tax-deferred basis. Note that when the savings element reaches a certain amount, it must be available to you as “cash value” in the event you decide not to continue with the original policy. Because of the potential for the savings element to grow over time, premiums are generally higher for permanent than for term insurance. However, the premiums remain the same while term coverage has the potential to increase substantially every time you renew it.

     If you’ve yet to purchase life insurance, you are not alone. According to the Insurance Information Institute (III), about 70 million American adults have no life insurance. The team at HFG Wealth Management, LLC can assist in reviewing a financial plan to determine if life insurance is actually needed. A proper financial assessment will provide comfort and peace of mind for your family.

     You are faced with an array of financial opportunities and responsibilities throughout your career and your life. HFG offers comprehensive guidance and a disciplined approach to wealth management. We can build a solid plan and a lasting partnership to help you, a family member, or a trusted associate, realize a distinct vision for the future. Please visit www.hfgwm.com/insurance for more information.

Blog Disclosure
Examples are hypothetical in nature and are for illustrative purposes only. HFG Wealth Management, LLC (“HFG”) is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. The views expressed by the author are the author’s alone and do not necessarily represent the views of HFG or its affiliates. The information contained in any third-party resource cited herein, including but not limited to other blogs, websites or articles, is not owned or controlled by HFG, and HFG does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by HFG of third party or any of its content or use of its content. The standard information provided in this article is for general educational purposes only and should not be construed as, or used as a substitute for, financial, investment, or other professional advice. If you have questions regarding your financial situation you should consult your financial planner, investment advisor, attorney or other professional. A copy of HFG’s current ADV Part 2A discussing HFG’s investment advisory and financial planning services and fees is available for review upon request or at www.adviserinfo.sec.gov.

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