Why You Need Life Insurance – Jerry Fetta
You need life insurance. That’s a fact! This isn’t some emotional pitch where I coerce you into thinking about what your family would go through if you were to pass away and leave them in dire straights. I believe that pitch is manipulative. Life insurance is just simple math and logic. You are a business and what defines a business is income. If your income leaves, your business is out of business. You see, the word economy at its root actually referred the management of a household, specifically relating to finances. Life insurance is ensuring that your personal economy doesn’t die when you do. The fact is you do need it. The questions are, when, how much, for how long, and what type? Let’s answer these.
When do you need life insurance? You need life insurance the moment somebody else relies on your income. This could mean you got married and now your have a family to care for. This could also mean that someone co-signed on a loan for you and they’d be held responsible for it if you died (many college loans are structured this way.) You need life insurance as soon as your personal economy includes more than just yourself.
How much life insurance do you need? Great question! There are many methods to calculate! I believe that you need to factor a few things:
- Debt: you need enough death benefit to pay off all of your consumer debt
- Income: you need enough life insurance purchase an asset that will replace your income for you. If you make $50,000 per year, you’d do this math: $50,000 divided by .12. Why? You want real estate and assuming you have a 12% cash on cash return, you can find out how much real estate is needed at a 12% return to produce the income you need. You want your life insurance to pay for a 25% down payment to purchase an income property that will replace your income. $50,000 divided by 12% = $416,667. This money will purchase an asset that will quite literally replace your income.
- Mortgage: if you have a mortgage, you need enough death benefit to pay it off.
- Final Expenses: you need $15,000 included in your coverage to pay any final expenses required to provide a phenomenal burial ceremony that will make your family proud and remember your legacy.
How long do you need life insurance? Technically forever. Your income is your family’s greatest asset forever and therefore, it should always be insured. Additionally, even if you have enough passive income from assets that your income isn’t needed, your family will still want life insurance to cover your estate taxes. By paying for a policy, you actually pay yourself cash value that you can use to acquire more assets and when you do pass away, your death benefit can be used to pay your estate taxes so that your family doesn’t get stolen from by our friends at the IRS.
What type of life insurance do you need? You want properly structured, high cash value, dividend paying whole life insurance. This is the only kind of insurance you should own. A properly structured policy like this can act as your life insurance, your sacred account, your first business (a banking & financing system), and your long term care coverage option. I call this Sacred Account life insurance.
Life insurance is an integral part of your wealth building strategy, but not for the reasons most people believe. It is an abundance move, not a fear and scarcity move. While you’re living, you will use your life insurance for cash accumulation as a Sacred Account and as a financing business. When you’re older you will use the life insurance to cover long term care costs. When you die you will use the life insurance to buy assets that replace your income and prevent the IRS from stealing a large chunk of your legacy (estate) from your loved ones. Click here if you’ve never heard someone break down life insurance like this before and you’d like to hear more.
Own Your Potential,
Jerry Fetta helps his clients make money, keep it, and multiply it.
He believes everyone should own their potential. He believes you were not created to spend 40+ hours per week serving the 40-year-to-life sentence trading your precious time for money just to live in mediocrity.
However, the truth is that time and money must be exchanged. It just doesn’t need to be you making the exchange.
Jerry helps his clients create wealth that exchanges time and money on their behalf.
His clients see a 30% increase in income, a guaranteed increase in savings rate, and 8-12% fixed annual returns on their assets in the 1st 90 days of working with him.
To get started, go to www.WealthDynamX.com/potential