Do You Need Life Insurance If You Already Have Life Insurance – Podcast Episode 30

In this podcast, I’m going to be discussing when do you need burial insurance? If you already have life insurance? In this podcast, I’m going to cover six topics to help you understand when do you need burial insurance if you already have life insurance, let’s rip right into number one. So if you don’t have enough life insurance coverage, to cover the cost of your burial, then burial insurance would be perfect in most cases.

And let’s let’s look at an example. Let’s say you had the most common life insurance when you’re younger is like term life insurance. So let’s say that you had a $250,000 term life insurance policy. But that policy was really dedicated to paying off your mortgage, should you die unexpectedly and your spouse or partner is left without your income. So it could pay off the house and then potentially replace some of your income in your absence. Because when you die, your employers don’t keep sending checks, do they? No, not at all.

1:39

So the the disadvantage of a term policy is that it lasts for a specific period of time a specific term. So if you have a 10, year, 15, year 2030 year policy, whatever it would be, at some point that’s going to end. And, you know, although in that $250,000, there might be enough coverage to pay for a burial in there. In most cases, you want the house paid off, and then you want that extra money just to replace your income because I can tell you one thing, even $250,000, if all that went to is replacing your income, that doesn’t last very long.

If you make 100 grand a year, that only lasts two and a half years, if you make 50 grand a year that only lasts five years. And we know that money goes quicker when there’s only one income earner in the family versus two. So that’s not a lot of Term life insurance, and it is going to end someday. So in that case, having some dedicated burial insurance may make sense in most cases, it does make sense because the burial insurance is going to be a whole life policy, you will never outlive it, it will last until age 121 years old, the price will never go up, the coverage will never go down. It’s permanent. And we really look at recommending permanent plans for permanent needs.

3:07

You know term life insurance policy, if you’ve got a 10 year 20 year plan, you’re hoping to have lived out plan you should celebrate the day that you outlive that plan because you didn’t want to die to use the policy in the first place. It’s just there, just in case something falls out of the sky or somebody runs you down in a truck or something like that, that you just didn’t see coming and your family is going to need that money. But if you never use it, that’s ideal. But burial insurance, you are going to use it No. Nobody gets off this planet alive.

3:37

Everybody dies, everybody’s going to need some insurance money, or some funding to pay for their burial. So point number two about do you need burial insurance if you already have life insurance? Well, if you don’t want to use your life insurance benefit for final expenses, that would be a great reason to have a final expense policy to like I talked about in point number one, you may have all of your existing Term Life Insurance tied up and spoken for.

And again, $250,000 is not a lot of insurance. You know, even a million dollars, you might think a million dollars, I’d be rich. Well, if you’re if you’re making $100,000 a year, you know, a million dollars is going to replace 10 years worth of income. But it kind of really doesn’t. Because we know that inflation goes up. So the entire time that you’re spending that $1 million down $100,000 year inflation is eating away at that because things get more expensive over time.

4:39

So let’s say that you took that million dollars and you invested in it and you got a 5% return on interest. My interest rates have been low that’s probably pretty generous right now. Let’s say you got a 5% return on that or your your surviving spouse or partner did so out of a million dollars that would only pay out $50,000 A year, without drawing down the million dollar balance ever? Well, if you were making $100,000, and your spouse or surviving partner were was counting on that $100,000. Now that income has been cut in half, and they’re only going to get $50,000 If they don’t want the million dollars to keep declining and getting less and less and less. So it’s kind of interesting.

5:28

A lot of people think that if they get a million dollar life insurance settlement, they’re millionaires, where if you invest that money, you’re only like $50,000 errors right here. It’s not a lot of money. And if if the interest rates 4%, it’s only $40,000. So yeah, in many cases, it makes sense just to get a separate permanent, whole life plan, just for your burial needs. And that way, you never have to worry about depleting that money from the term policy. And if you outlive the term policy, you’re you’re you’re in good shape, you’ve got a policy for that.

6:03

So a third point on when do you need burial insurance if you already have life insurance is when you have specific final wishes. So you may have want specific things done at your funeral. And it could be you know, religious things done, it could be ethnic things that need to be done. It could be just the way that you know, your family’s done it for generations, grandpappy was buried that way, and everybody’s going to be buried that way. And it’s a little bit more expensive.

6:34

You know, you may want money paid out directly to a funeral home. So different policies have different requirements on who can and cannot be beneficiaries. So if you’ve got specific final wishes, a whole life permanent plan can often fill that void better than a term life insurance plan or universal life or something like that. It’s really, it’s really situational specific. And if you have any questions about that, we can certainly help you out with it. Our next point about when do you need burial insurance, if you already have life insurance, is when you want coverage for funeral expenses only.

7:16

So if the only thing you want to cover is your funeral expenses, then stay away from a temporary policy, go with the whole life insurance policy, your prices will be locked in for life. Let’s say you had a 20 year policy and you were blessed to live 20 years and you outlive that plan. Some plans say that you can renew them all the way up to age 95. And although technically, that’s true, man, you need to read the fine print on that sucker. I can tell you that. Because if it’s a 20 year policy, and you’re 60 right now, and it expires at age 80, it’s going to recalculate at your age at 20 years older, it’s not going to give you the rate that you were 60.

Now the insurance companies don’t do it that way. And in many cases, what your premium was, when you bought the policy, it’s not going to be 567, maybe even eight fold higher. So in most cases, the insurance companies, they they it’s kind of punishing rates once you get out of the 20 year term. And don’t blame that on the insurance companies. They don’t want to insure you after 20 years because you’re at a higher risk.

8:32

But but but think of it this way. If you were diagnosed with cancer at age 79, in 10 months, and you knew you were going to die in the next one or two years, you would pay those higher premiums, especially if you had a 234 or $500,000 policy, because it’s just math, right? Even if it costs you for, say $5,000 a year, you’d spend 10,000 Over the next two years. And if you had a 5000 $100,000 policy, it’s going to pay out like 490. So yeah, it’s just a math problem at that point.

9:06

If you got any questions about that reach out to us it gets a little complicated if you’re not kind of used to running some numbers on this insurance and everything. But yeah, it works out perfectly in that case. Our next point about when do you need burial insurance if you already have life insurance is when you want to avoid using savings. So as we get older, and most burial insurance is purchased by people between the age of 50 and 85. Roughly, it can be less it can be more we can help you in either situation. But most people don’t want to rely on their savings. And here’s the reason why. As we get older, you know stuff happens. And if we have any savings, often our savings are getting depleted as we get older.

9:54

You know we’re on a fixed income inflation is increasing the pricing of everything. You have more than medical bills. I mean, it can only take one health problem to wipe out a family’s savings. And then all that money that you thought was there for your burial is no longer there. And now, if you would just bought the burial insurance years in advance, your price would be locked in, you wouldn’t have to worry about any of this. But now that that money is gone, you now you’re out in the open market shopping for burial insurance, and you’re older. And you know, now you’ve got health issues that may disqualify you. And it’s the wrong time to be looking for those insurances when you’re, when you’re sick, or you just had some medical event, or you just got out of the hospital or something like that, in most cases, really just depends on the insurance company.

10:42

But what people really like about it is they just know that they’ve got a permanent plan in place, that no matter what happens, it’s always going to be there, whether all their income and savings disappears or not. And our sixth and final point about when do you need burial insurance, if you already have life insurance is when you want permanent peace of mind. I kind of just touched on that a little bit, didn’t I? Yeah, so term life insurance doesn’t work. Because it’s for a specific period of time.

Universal Life, unless you fund it correctly, will end at specific ages. And you know, if you’re talking to an agent, and they’re pushing Universal Life on you, you need to look at real world examples, not like illustrations that assume a super high interest rate within the policy. Universal Life numbers can kind of be twisted all over the place, you need to be looking at guaranteed, guaranteed parts of the policy, not just projections. So they’re complicated.

11:49

Be careful if if a life insurance agents pushing Universal Life at you, it’s got its place, it’s got its time. But when you’re looking for, you know something that doesn’t have any loopholes in it, that’s going to be permanent, whole life insurance, that’s going to give you the peace of mind, knowing that no matter what happens, no matter whenever it happens, as long as you get the right policy. Right, because you do want to avoid a two year waiting period plan, don’t you? Yes, you do.

Yes, we never recommend a two year waiting period plan if you qualify for first aid coverage. Because if you want permanent peace of mind, that means permanent on the long side, that also means permanent in the first two years. You know, if you’ve got a plan with a two year waiting period, that’s not permanent. I mean, it is after the two years.

12:44

But in many cases, you know, you see those plans on TV, they say yeah, you for 990 something, you can get all this coverage. And then you find out for like 995 It’s only $467 worth of coverage, you know, based off your age, or whatever it would be, and they’re gonna shock you with a two year waiting period. Is that permanent peace of mind, knowing that there can be 200% more expensive, or that’s not the peace of mind I think I want or our clients want. So yeah, I hope that answers some questions about when do you need burial insurance if you already have life insurance.

NOTE: Show notes are AI transcribed, so there may be some spelling or grammatical errors.