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Arkansas Insurance Blog

How Much Life Insurance Do I Need?

Life insurance is an essential coverage and kudos for starting the process of getting it. However, you might be in a dilemma over how much life insurance you need. Here is a breakdown of how much life insurance you need as a resident of Northwest Arkansas by the insurance experts at Adams Insurance & Financial.

Calculating Your Life Insurance Need

The goal of life insurance is for you to protect your dependents financially in case you pass away. Your current financial and your current and future family situation will influence how much life insurance you need. Here are some easy-to-use formulae to use:

  • Multiply your annual income 10-fold

Multiplying your income 10-fold is the simplest way to calculate how much life insurance you need. For example, if you earn $75,000 annually, you multiply this by 10 to arrive at $750,000. Therefore, you should purchase a life insurance policy worth $750,000. However, this formula doesn’t give a detailed look at your family’s evolving needs and other factors like existing life insurance and savings.

  • Multiply your annual income by 10 and $100,000 for each child’s college expenses

This formula for calculating life insurance needs is an improvement to the one above as it considers the children’s college expenses. Let’s say you are a parent to 3 children whom you expect to go to college, and your annual income is $75,000. Your total life insurance need will be $750,000 plus $300,000 for your children’s college expenses, which adds up to $1.05 million.

  • Utilize the DIME formula

The DIME formula takes a detailed look at your finances and your family’s evolving needs. Your debts, income, mortgage, and children’s educational needs will be considered when figuring out how much life insurance you need using formula. Due to the complexity of the DIME formula, it’s best that you have an insurance agent help you with the calculations.

Give Us A Call

Contact Adams Insurance & Financial for assistance with life insurance need calculation in Northwest Arkansas.

What type of life insurance is right for me?

People that live in the Northwest Arkansas area are going to always have different personal insurance needs. An important type of coverage that all people need to consider getting is life insurance. With this type of insurance, you can provide financial support to those that you care about and receive other financial benefits. As you are looking for coverage, you can find there are various options to consider. The two most common are whole and term life and understanding the benefits of each will help decide which is right for your situation.

Term Life Insurance

A form of life insurance protection that all people should think about pursuing is term life insurance. This type of coverage will provide life insurance support for a specific period of time. It is ideal for many as the premiums tend to be more affordable and you can personalize a plan that will provide you with the right type and level of coverage. 

Whole Life Coverage

You should also consider getting a whole life insurance plan. This type of insurance will offer life insurance protection for the rest of your life if you continue to make payments each month. An added benefit is that it can be used as a conservative investment tool as some of your payments each month will accrue in an account and grow with interest. In the future, you will be able to take money out of this account. 

Getting a life insurance plan is a big decision for anyone that is in the Northwest Arkansas area. As you are assessing your personal insurance needs in this area, you should call the team with Adams Insurance & Financial. There are a lot of important choices to make and Adams Insurance & Financial can help you build a plan that will provide the ideal coverage. 

New Parent’s Guide to Life Insurance

A new life coming into yours will make you reevaluate your priorities and plans. Adams Insurance & Financial serving northwest Arkansas has a quick primer on life insurance and how it can help your family now and later.

Term versus Permanent Life

Term life insurance lasts for a set amount of time and tends to have few benefits other than the potential payout. Permanent life insurance is more expensive, but it has benefits that make it more attractive, notably the ability to lock in premium prices and avoid policy renegotiations that are a part of term life policies.

Life Insurance Incentives

As you pay into a permanent whole life insurance policy, it might accrue an actual cash value. Universal life insurance policies will earn interest on this amount, which means it makes money for you. The indexed universal version provides a return based on an index like the S&P 500. Variable universal policies will let you choose some of the investments for your cash value. Some policies allow you to take out loans against the value or withdraw the funds.

The exact details of each policy type will vary between providers and situations, but that should give you a general idea of their benefits.

Life Insurance Options for Your Child

A permanent life insurance policy for your child can also be a wise investment. Since children are generally at lower risk and have no dependents, companies may offer even more incentives if you purchase a permanent policy. You have likely seen long-running advertisements for a whole life insurance policy for children that doubles the benefits once they reach maturity. You can grant the policy to them then, helping to protect any future grandchildren.

Sort Out Your Life Insurance Options

There is more to learn about life insurance, so new parents in northwest Arkansas should contact Adams Insurance & Financial to get a better picture of their available options.

Everything you need to know about life insurance beneficiaries

Congratulations on making your first step towards safeguarding your dependent’s future. The critical part is over, but you’ve yet to make another lifelong decision that can cost you peace if you are not careful enough–choosing a life insurance beneficiary. Not sure what a beneficiary is? How to pick one, and why you should discuss it with your family? Adams Insurance & Financial will help you get all the answers.

What is a Life Insurance Beneficiary?

A beneficiary is simply the person or entity you want to receive and benefit from the wealth you leave behind in your life insurance policy. When you purchase your life insurance policy in Northwest Arkansas, you will be asked to name two people or entities as your beneficiaries. It is a critical part of the policy. After all, beneficiaries are the reason you’re buying the policy in the first place.

Who Can Be My Beneficiary

Anyone can be your life insurance policy. It can be your family, friend, neighbor, organization, business partner, or even a trust. It’s essential to note that some insurance companies limit the number of beneficiaries you can name. However, if you have to name all of them, it is critical that you determine the percentage each should get to avoid conflict.

Difference Between Contingent and Primary Beneficiary

Every life insurance policy comes with two entries for beneficiaries. You must add a primary beneficiary and a contingent beneficiary. The primary beneficiary is the first name to receive the death benefit if you die, but if the primary beneficiary dies before you, the secondary, also known as contingent beneficiaries, will receive the death benefit.

Need Help?

At Adams Insurance & Financial, we care about what you value. We are here to help you understand your policy better, so you can obtain enough coverage for the people that matter to you. Call our Northwest Arkansas agents, and they will be happy to help.

4 Reasons You Need Life Insurance

Life insurance isn’t a topic most people want to discuss. From our experience at Adams Insurance & Financial, we see most people procrastinate life insurance until something significant happens. This shouldn’t be the case. Purchasing life insurance early on is a worthwhile investment you can count on. But because it’s never too late, you can still buy life insurance to enjoy the below benefits.

To protect your loved ones.

If you have anyone that depends on you for financial support, that alone is a reason to buy life insurance. Life insurance substitutes your income when you pass on. As such, your dependents don’t have to suffer financially when you are long gone.

To leave an inheritance. 

Yes, you might not have substantial assets to leave to your heirs, but with life insurance, you have something to pass on. This way, you will leave your kids or parents with substantial financial support to cater to expenses you used to pay when you were alive.

To pay off debts.

Perhaps you have a home or car debt. If you were to die today, who will assume your obligations? Generally, your next of kin will have to bear the financial liability. Would you want that? Certainly not. With this in mind, obtaining life insurance takes care of your debts, thus making sure that your loved ones don’t have to carry your debt burden when your time comes.

For a sense of security.

Generally, human beings worry a lot. To this end, the thought of death might invoke a flurry of thoughts, especially pondering how your loved ones will cope when you are long gone. Of course, they will be sad, but they don’t have to slump into a financial mess when you die. Taking life insurance won’t replace life, but it gives you the certainty that your family will be taken care of when you die.

Life insurance in Northwest Arkansas.

Need more information on life insurance? Please contact us at Adams Insurance & Financial for more insights. And if looking for a life insurance investment, we are ready to help you protect your loved ones now and in the future. Please contact us today if you are in Northwest Arkansas and the surrounding areas.

4 Reasons You Need Life Insurance

Life insurance isn’t a topic most people want to discuss. From our experience at Adams Insurance & Financial, we see most people procrastinate life insurance until something significant happens. This shouldn’t be the case. Purchasing life insurance early on is a worthwhile investment you can count on. But because it’s never too late, you can still buy life insurance to enjoy the below benefits.

To protect your loved ones.

If you have anyone that depends on you for financial support, that alone is a reason to buy life insurance. Life insurance substitutes your income when you pass on. As such, your dependents don’t have to suffer financially when you are long gone.

To leave an inheritance. 

Yes, you might not have substantial assets to leave to your heirs, but with life insurance, you have something to pass on. This way, you will leave your kids or parents with substantial financial support to cater to expenses you used to pay when you were alive.

To pay off debts.

Perhaps you have a home or car debt. If you were to die today, who will assume your obligations? Generally, your next of kin will have to bear the financial liability. Would you want that? Certainly not. With this in mind, obtaining life insurance takes care of your debts, thus making sure that your loved ones don’t have to carry your debt burden when your time comes.

For a sense of security.

Generally, human beings worry a lot. To this end, the thought of death might invoke a flurry of thoughts, especially pondering how your loved ones will cope when you are long gone. Of course, they will be sad, but they don’t have to slump into a financial mess when you die. Taking life insurance won’t replace life, but it gives you the certainty that your family will be taken care of when you die.

Life insurance in Northwest Arkansas.

Need more information on life insurance? Please contact us at Adams Insurance & Financial for more insights. And if looking for a life insurance investment, we are ready to help you protect your loved ones now and in the future. Please contact us today if you are in Northwest Arkansas and the surrounding areas.

When should I update my life insurance

Life insurance is a very personalized type of insurance. It needs to be tailored to your life, and it is not something that remains the same when you are 20 as when you are 40 or 60. It needs to grow with you as your life ebbs and flows. Having an insurance agent you trust and who has personal knowledge of your situation is important. Adams Insurance & Financial in Northwest Arkansas is just such an agency. Our experienced staff is ready to provide "out of the ordinary" customer service. 

You change employers

It is often the case you get life insurance as part of a benefits package. When you change employers, you will need to take on the payment of that benefit yourself if you want to retain it. It may not be the best option for you.  

You get married

When you get married, you should change the beneficiary on your life insurance policy. This is a very good time to make sure you have adequate coverage for your new spouse. 

You have children

When you have children, you have a responsibility for more than 20 years into the future to provide for their needs. If you want to pay for college, this is also something to factor in the amount of life insurance you need to have, 

You retire

When you retire, you need may totally change. If your children have all flown the coup, you may not need the amount of life insurance you have had over the years. A decreased income is also something that may determine your life insurance needs. 

When you are ready to review your current life insurance coverage at Adams Insurance & Financial in Northwest Arkansas, we are ready to help you. Give us a call and let us help you to update your life insurance. 

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