Stacy Tucker of State Farm Insurance shares tips on how to improve your financial planning!

Did you know Life Insurance can be a part of your financial planning?

Historically, we have used life insurance to replace income, especially during working and asset building years. It provides immediate cash to cover expenses, like mortgage, car note, food and other expenses. Even when you have plenty of other assets, it is an important tool in your financial planning toolbox.

We can use it in at least three other ways as part of an intelligent Legacy-building plan.

Generational Wealth Transfer – Life insurance allows you to transfer sizeable sums of wealth for pennies on the dollar. This allows you to leave tax-free money to your beneficiaries. Someone can typically receive proceeds within a few weeks. Other assets like savings accounts, Roth and 401K and real estate are more complex to liquidate and are taxed. 

Business Planning – Life insurance can help you pass on business assets to your family. If you have a business partner, you can use to buy-sell agreements to ensure that your business and the assets you built get passed to your family or whoever you have decided up-front should benefit. The policy can also replace business income in the event one owner dies. 

Retirement – Some types of life insurance plans allow you to take income from the cash value to supplement your other retirement assets (cash, stocks, pensions, real estate). Some policies allow you to access the policy benefit if you have a terminal illness or need long-term care. 

Large purchases don’t have to wreck your financial goals. For example, did you know you can make good financial choices when purchasing a vehicle? 

The first thing is to realize how the car will serve you. It can be for utility, luxury, transportation or to build assets. Since it is a depreciating asset, you will need to factor that in when considering how much you will spend. Understand the TOTAL cost of ownership. Price is just the beginning. There is maintenance, fuel, property taxes, and insurance and loss of value. Avoid negative equity by either paying cash or a substantial down payment. This reduces the amount of finance charges. Don’t finance “extras” like extended warranties and GAAP insurance. Bring an unbiased friend or family member when shopping to avoid impulse decisions. Shop around for the most competitive interest rate if you have to finance. 

Here are a few steps you can take right NOW to start financial planning: 

• Take an honest and organized look at all your income and assets. 
• Review all your insurance policies so you and your family know what you have now and how to fill any financial or risk gaps.
• Discuss how to get access to any professional and resources for advice. 
• Find a financial planner. Get a recommendation from a trusted friend or other professional. If you feel it is too early to get a planner, plan a family estate planning day and identify assets and determine how to build them. Build a plan to fill any financial and wealth transfer gaps.