OneTransaction® to Build Generational Wealth - Insurance

We, at OneUnited Bank, want you to focus on #OneTransaction to build generational wealth, which includes insurance.

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How Much Life Insurance Do I Need?

One of the least costly ways to build generational wealth is to have term life insurance.

Many Americans have historically associated life insurance primarily with one thing: paying for burial expenses. We’re under-insured!

A simple equation is:

  1. Add up your financial obligations (such as your annual income if you pass away, your mortgage, car loans, children’s college costs, etc.).
  2. Subtract assets that your family could use for those expenses (such as savings, home equity, existing life insurance, etc.).
  3. The difference is your life insurance need (Many life insurance companies have calculators to help you determine your insurance need).
  4. Then add additional insurance to create generational wealth (you want to leave more than your life insurance needs).

Don’t simply rely on life insurance from your job, which is typically not enough.

What Type Of Life Insurance Do I Need?

Consider at least having term life insurance to cover your insurance needs plus additional insurance to build generational wealth. One of the least costly ways to create generational wealth is to have term life insurance.

There are two major types of life insurance:

Term Life Insurance

Pays a death benefit when the insured person dies during the term of the policy, which typically ranges from 1 to 30 years. Term life is simpler and much less expensive than permanent life, but does not have any cash value, so you can’t take a loan against the policy.

Permanent Life Insurance

Pays a death benefit whenever the insured person dies. The policy may also have cash value that you can access through a loan or withdrawal. Some say permanent life is simply term life with an investment vehicle attached that accumulates cash values. You must dig deeper to understand the investment vehicle to select a good option. Permanent life includes universal life and whole life insurance.

What’s The Price Of Insurance Coverage?

Many people overestimate the cost of insurance, which varies based on several criteria, including age, gender, and health.

As an example, a 35-year-old man who’s in excellent health and a non-smoker could pay around $23 a month for a 20-year, $500,000 policy. A 35-year-old woman could pay $20 a month for the same policy. A 45-year-old man could pay around $56/month. With term life insurance, the monthly expense does not change for the entire term. Life insurance cost is reasonable compared to the benefit.

If I Don’t Use The Life Insurance, Isn’t It A Waste Of Money?

The simple answer is no, life insurance is not a waste of money, even if you don’t use it. In fact, we hope you don’t need it.

Life insurance coverage is cheaper when you least need it (when you’re young and healthy). As you age, the cost increases. Locking in the cost today is less expensive than tomorrow. In addition, life insurance can create generational wealth in case you unexpectedly pass away.

The Program

Here Are 4 Steps to Get Started

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Have a Family Meeting

Start by sharing this article with your family members – especially your parents – so that each generation has insurance. Take a deep breath and discuss your desire to build generational wealth through life insurance if you pass away.

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Choose Your Beneficiaries for Your Life Insurance

Life insurance is paid to a beneficiary(ies). Life insurance beneficiaries can be individuals, such as a spouse or adult child, or entities, such as a trust. Life insurance proceeds are considered tax-free to the beneficiary and are not reported as gross income. However, any interest received or accrued is considered taxable and is reported as any other interest received.

If you have minor children, you may choose to establish a trust and name it as the beneficiary of your life insurance policy. If you were to pass away, the policy’s death benefit would be paid to the trust. The trustee would then be charged with managing those assets according to the terms of the trust on behalf of its beneficiaries, i.e. your children.

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Research Life Insurance Options

There are many companies waiting to sell you life insurance. Here are a few options to research:

  • Insurify – Insurify is an American insurance comparison shopping website headquartered in Cambridge, Massachusetts. It provides quick quotes from participating insurance companies.
  • National African American Insurance Association – (NAAIA) was organized to create a network among people of color and others employed in or affiliated with the insurance industry. Although it does not directly provide quotes, its members may help you navigate your insurance options. Find a local chapter.
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Obtain Life Insurance Now!

Remember the older you become, the higher the cost of life insurance. So, there’s no time like the present. You can always increase the size of your policy or get a longer term. However, having life insurance to cover your insurance needs and build generational wealth is essential.

This summary is to get you started. Please check with a financial advisor, an attorney, family members, and/or friends. Simply focus on getting this OneTransaction done to create generational wealth!

OneUnited Bank is not a financial advisor and recommends you discuss with your family and a financial advisor. All services, including non-real estate secured business loans or equity capital, are not offered by OneUnited Bank. To learn more visit our Loans page.

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