Income Replacement 101

[vc_row][vc_column][vc_custom_heading text=”So what is Income Replacement and why does it matter to me?” use_theme_fonts=”yes”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]The Income Replacement conversation is centers around the idea that my spouse and/or my children rely on my income, in part or in whole, for the success of their livelihood.  This conversation drives at a few questions:

  1. Do I want to provide income to my spouse and/or children if I were no longer around?
  2. How much income would they really need if I were going to replace it for them?
  3. If I didn’t replace my income, how would it affect my family? (what decisions would they be forced to make in my absence?)
  4. What are my options?

The intent of Income Replacement 101 is to setup your mindset for positioning Income Replacement to your clients.  Take a look at the calculators and descriptions in this article to help you quickly position your conversations.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”Traditional Income Replacement” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes” text_transform=”text-capitalize”][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_column_text]If I am married or in a domestic partnership, why would I want to provide for the replacement of my income?  Well, most people begin accumulating “stuff” together and this includes; homes, cars, toys, and more.  Many of these items are financed, not paid for in cash.  Don’t forget about rent too…if you rent your home its just as important to replace the income as if you own your home.  Have you though about how or if you spouse could afford the payments on these if you were not around?

Now lets bring kids into the equation and ask the question a little bit differently; Have you thought about how your spouse and children could afford to live if they were minus your income?

Here’s a guide to the income replacement calculator:

  1. Verify your Age
  2. Input your current annual income
  3. Use the slider to verify how long your income replacement should last
  4. Enter interest rate do you think you could safely average during that timeframe?
  5. Take a look at the result.

HINT: you can adjust the slider and see in real time how the duration of replacement impacts the lump sum needed.[/vc_column_text][/vc_column][vc_column width=”1/2″][vc_column_text][CP_CALCULATED_FIELDS id=”7″][/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”Income Replacement Minus Mortgage Payment” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes” text_transform=”text-uppercase”][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_column_text]Now let’s take the income replacement one step further.  What if you did a good job planning and you bought life insurance specifically to cover your mortgage?  You may hear this referred to as Mortgage Protection.  First, this is a great idea and we commend you taking care of this.  Second, we can account for removing your mortgage payment from the income replacement if that’s your goal.

The Income Replacement Calculator now will have a field showing your monthly mortgage payment.  Here is how to complete this calculator:

  1. Verify your Age
  2. Input your current annual income
  3. Input your monthly house payment
  4. Use the slider to verify how long your income replacement should last
  5. What interest rate do you think you could safely average during that timeframe? (enter the interest rate)
  6. Take a look at the result.

HINT: you can adjust the slider and see in real time how the duration of replacement impacts the lump sum needed.[/vc_column_text][/vc_column][vc_column width=”1/2″][vc_column_text][CP_CALCULATED_FIELDS id=”8″][/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Income replacement is a foundational planning component for any couple with or without children.  If you have any questions on how to setup an income replacement plan please email [email protected] or give us a call at 800-568-5667 and follow the prompts.  One of our team members will be ready to help!

Below are a few resources in addition to this article to help you with your income replacement sales.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_custom_heading text=”Common Objections” font_container=”tag:h4|text_align:left” use_theme_fonts=”yes” text_transform=”text-capitalize”][vc_toggle title=”I don’t want to make the next spouse rich…”]Answer:  We have found that most families prefer allowing the surviving spouse the time needed to decide if remarrying is even something they have interest in.  This way they aren’t rushed into poor decision making.

Answer:  You are building a lifestyle together have you mutually agreed on how far either of you were willing to reduce your lifestyle if the other weren’t here?

Answer:  (look at the other spouse)…How do you feel about that?[/vc_toggle][vc_toggle title=”I don’t want to provide that much death benefit.”]Answer:  There are many ways to structure income replacement.  Can you help me understand if its an issue of the amount of death benefit or what (you think) the cost is (or will be)?

Answer:  What would you be most interested in reducing, the amount of income we are replacing or the duration the income is being replaced?

Answer: If we could ensure that the income would be paid each year or month vs a large lump sum, would this reduce your concern?[/vc_toggle][/vc_column][vc_column width=”1/2″][vc_custom_heading text=”Resources” font_container=”tag:h4|text_align:left” use_theme_fonts=”yes” text_transform=”text-capitalize”][vc_column_text][fivo_docs ids=”2383″]

Income Replacement Calculator

Income Replacement Calculator Minus Mortgage[/vc_column_text][/vc_column][/vc_row]

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