Life Insurance Advice
Welcome to AmFi Life’s Insurance Advice Center, your go-to resource for expert guidance on navigating life insurance decisions.
Whether you’re a veteran, government employee, or first responder, we understand the unique challenges you face. Our goal is to provide clear, actionable advice to help you make informed choices about your life insurance coverage. From selecting the right beneficiaries to the differences between VGLI and private plans, we’ve got you covered. Explore our guides to ensure your loved ones’ financial security and gain peace of mind with AmFi’s comprehensive insurance solutions.
How much life insurance do I need?
If you have a family, or plan to have a family, buy enough life insurance so that when combined with other sources of income, it will replace the income you now generate for them. Additionally, consider having enough to offset any additional expenses they will incur to replace the services you provide. Your family may also need extra money to make changes after you die, for example, they may want to relocate or your spouse may need to go back to school.
DIME Formula
The DIME formula is a common method used to determine how much life insurance coverage is necessary. DIME stands for Debt, Income, Mortgage, and Education, which are the four main factors that are considered when calculating life insurance coverage.
Once you have these four figures, add them together. This will give you a rough estimate of the life insurance coverage that you need.
Here’s how to calculate life insurance coverage using the DIME formula:
Debt
Add up all your debts, including mortgages, car loans, credit card balances, student loans, and any other outstanding debts.
Income
Determine how much income your family would need if you were to pass away. This includes both your current income and any future income that you would have
Mortgage
Calculate how much it would cost to pay off your mortgage in case of your passing.
Education
If you have children, consider how much it would cost to pay for their education, including college expenses.
Other Considerations :
- Consider if there is any “hidden income” that should also be planned for. Hidden income is income that you receive through your employment but that isn’t part of your gross wages. It includes things like your employer’s subsidy or your health insurance premium, the matching contribution to your 401(k) plan, and any other perks both large and small. This is an often-overlooked insurance need but can be significant.
- If you want to create an inheritance or make a charitable contribution, buy enough life insurance to achieve those goals.
- Plan for expenses that arise at death. These include the funeral costs, taxes and administrative costs associated with winding up an estate and passing property to heirs. At a minimum, plan for $15,000.
- Consider additional factors such as your age, health, and lifestyle to help you determine your specific needs. If you are a first responder or other hero, you may want more coverage.
What are the different types of life insurance? Which is right for me?
Life insurance comes in various forms, each designed to meet different needs. The main types are term life insurance, whole life insurance, and universal life insurance. Term life insurance provides coverage for a specific period, making it an affordable temporary option. Whole life insurance offers lifelong coverage with a savings component, providing consistent premiums and a cash value that grows over time. Universal life insurance also provides lifelong coverage and a cash growth component but with more flexibility in premiums and death benefits. Choosing the right type depends on your financial goals, budget, and the level of coverage you need to protect your family’s future.
Is SGLI/VGLI enough for me?
Servicemembers’ Group Life Insurance (SGLI) provides coverage for active-duty members, who have 120 days post-discharge to convert to Veterans’ Group Life Insurance (VGLI) or a commercial policy like those from AmFi. Retired Reserve soldiers must also choose between these options. Note, you can’t convert to both. While VGLI is initially cost-effective, it lacks living benefits and becomes more expensive with age. In contrast, AmFi’s commercial policies offer fixed rates and long-term stability. If you choose VGLI first, you might switch to AmFi later based on your health. Choose AmFi for comprehensive, enduring protection for your family.
Servicemembers’ Group Life Insurance (SGLI) provides coverage for active-duty members. All active-duty members are automatically enrolled in SGLI unless they choose to opt out of it. The monthly premiums are automatically deducted from their paychecks. SGLI premiums are very cheap, sometimes even just one dollar per month or less, but the coverage amount they provide is relatively low. That is why active duty members may still benefit from having a commercial policy in addition to their SGLI coverage.
Upon leaving the service, you will lose SGLI but will have the opportunity to convert your SGLI policy into a Veterans’ Group Life Insurance (VGLI) or a commercial policy like those from AmFi. There are a few important things to note about this conversion process. The first is that the best time to initiate a SGLI conversion is within the first 120 days post-discharge. During that time, you can convert your policy to VGLI or a commercial policy without having to show proof of insurance or good health. The second thing to know is that, while you can initially only convert your SGLI policy to VGLI or a commercial policy, you can still sign up to have both types of insurance simultaneously. Again, the advantage of this would be to provide additional coverage beyond the relatively low amounts offered by SGLI and VGLI. Finally, while VGLI is initially cost-effective, it lacks living benefits and becomes more expensive with age. In contrast, AmFi’s universal life insurance policy offers fixed rates, long-term stability, and a cash growth savings component. Choose AmFi for comprehensive, enduring protection for your family.
How do I choose a beneficiary?
Choosing a life insurance beneficiary is a crucial decision. Be specific when naming beneficiaries, using full names to avoid ambiguity. Prioritize those who rely on you financially, considering their current and future needs. Regularly update designations to reflect life changes like marriage, divorce, or childbirth. Consult a legal or financial expert to navigate complexities and ensure your choices support your estate planning goals.
Quick Answers to Common Life Insurance Questions
Click below to find answers to our most commonly asked questions. If you don’t find your answer please contact us directly and one of our representatives will be happy to address your specific concerns.