Smart Money: What is life insurance?

When it comes to life insurance, there is a lot of misinformation and lack of education. There are 5 types of life insurance available on the market: term, whole live, universal life, variable universal life (I do not offer this product.), and indexed universal life. Term is the cheapest, but it expires after a certain period and you may be left without coverage or your coverage premium spikes. Whole doesn't build as much cash value, but these are the two most people know about. Variable is invested in the stock market and if you die at the wrong time, you could have less than your face amount to leave behind. Universal life builds at a set percentage, and indexed builds at a percentage based on the market. Of course if you just need coverage, you should find an agent who is honest and willing to share all of this with you so you can plan accordingly. I would love it if people did pay their policies for the year at tax time.

When I meet with potential clients, I start by completing a financial analysis. This is a very important tool when deciding which of these products best fits their current needs and their goals.

I use the DIME theory of insurance.

• Debt - how much consumer debt do you have? This can be covered with a term insurance policy.
• Income - how much income needs to be replaced for 8-12 years? This  needs to be covered with a permanent insurance policy.
• Mortgage - how many years and how much remains on your mortgage? This can be covered with a term insurance policy.
• Education -  how many children do you need to fund through college if you pass away before they get there? This can be covered with a term insurance policy.

Some people are firmly set against life insurance, and of course it's their right to choose one way or the other, but we readily insure cars, phones, homes, apartments and all kinds of material possessions without regard for the vehicle that we use to make the money to make these payments: our bodies/lives. If an individual has other means to replace their income, pay off their home, settle all their debts, pay for their children to maintain life and attend college after they are gone, and have their money work for them, I applaud them! The benefit, in my opinion, of investing with life insurance is that it gives you protection on your life while making you money at the same time. It's a great place to start your investment plan!

Life insurance is a contract that you purchase from an insurance agency that allows them to invest your money for a certain period of time. In exchange, the agency promises to pay your beneficiary upon your death and to pay you interest along with payments for any other provisions specified (disability income, long term care, children's insurance, etc) for a specified amount of time and money. Term contracts do not offer cash value accumulation. You can pay for your contract in small increments or in a lump sum.When you die, the company will then pay your beneficiaries your contract. This is how and why wealthy people (white or black or other) pass down wealth to their families. You don't pay $250k for a $250k contract, you only pay $26,520.95 and you own it. These are the things that more people need to be aware of! Let's kill the stigma around life insurance by becoming educated about how to use it and protect ourselves and our families while we can!

Smart Money: How to Invest your Income Tax Refund

2016 is fast approaching which means income tax season is coming! If you are like many Americans who receive an income tax refund, you have already estimated your refund and you're anxiously awaiting W-2s! So while you are mapping out what you could potentially do with your refund (if you get one), make sure you prioritize. Put the most important things FIRST: life after tax season! There are several things you can do to maximize the use of your refund and position yourself for life after refund. Including (not limited to):

• invest in bonds
• invest in stocks
• pay your current bills up for 6 months
• buy & pay up your life/health insurance for a year or two
• start a business
• DO NOT buy or finance a vehicle, jewelry, anything from Aarons, Rent-a-Center, etc!

Let's focus on two options: business and insurance. In 2013, I received an income tax refund of $1,118 and started my natural product line. I invested those funds to start a business that I was passionate about without going into debt. Another great option is life insurance. Life insurance is a great investment tool to have in your portfolio (not term or whole life). When you receive your income tax refund, pay it up for year or two! No new "bills," and your life is covered!

Let's take a look at some numbers for me. I am a 25 year old female, no tobacco usage, with no medical issues, and I have not been prescribed any medications in several years (since a bad stomach flu in 2012). I also have a four year old son that I want to protect. Here are a few options available to cover me and my son for a year (these numbers are for 12/17/2015):

Foresters
Smart UL $250,000: $1,275.31
20 Year Term: $484.60

AIG
Elite Index II $250,000: $817.60
20 Year Term $250,000: $186.50

Mutual of Omaha
Guaranteed UL $250,000: $$1,144
20 Year Term $250,000: $452


These are just a few options that I have available. Keep in mind that permanent insurance is customizable, and the right agent will customize a protection plan that fits your needs and your budget. Stay tuned for more information about how to customize your life insurance to fit your needs and your budget. Be blessed!

~Shanta Wilkerson