Selling real estate is a noble profession that can be entered into fairly easily. In fact, licensing does not require a degree and most agents can get licensed by their state by completing some coursework, taking and passing the state exam, and completing the required continuing education. In every case, however, we should discuss why real estate agents should buy term life insurance.
Florida happens to be a state where real estate agents prosper, and the license requirements are easier to fulfill than many other professions. For example, Florida requires only 63 credit hours of pre-licensing education while Colorado requires 162 credit hours. Most states have a minimum age for licensing set at 18 years-old.
Think about that for a minute. If a high-school graduate feels confident they could prosper in sales, they can just skip the cost of college and invest that money into a career in real estate. In fact, in Florida, for example, a real estate agent only needs two years of real estate sales experience before they can qualify to become a Broker and have other agents working for their organization. That is awesome! A high school graduate can start their career when they turn 18 and then invest the money they might have spent on college into their Brokerage firm, which could easily lead to a significant income before reaching 25 years-old.
Okay then. You’re making some money off your personal sales, and you’re making some money off your organization’s sales, so things are going along just fine. But, what about protecting yourself or your organization if the worst should happen? Here are 3 reasons why real estate agents should buy term insurance.
Protect Your Business
Whether you entered the real estate business at 18 or 25, or even 55, you need to protect your business if you should die unexpectedly. You need to make sure your business survives even if you’re not there to run it. Term life insurance can provide the funding vehicle to make sure this happens. Why Term? Because it’s cheaper than whole life or universal life. Here’s what you can do to protect your business and your family.
- Protect Your Business: For most entrepreneurs, when they start or buy a business, they accumulate significant debt right out of the gate, and if the business is going to continue, there needs to be enough cash to make that happen.
As the principal of your business, you can have the company take out life insurance on you so that when you die, the company will have the cash needed to buy the shares from your heirs and also replace your production revenue until a replacement principal can be recruited. The best way to design this type of business continuation plan is to have a CPA or other professional offer their guidance and then bring in your insurance agent to establish the funding with term life insurance.
Protect Your Family
It’s not unusual for a young real estate agent to also start a family while they are building their business. In fact, it makes great sense to start out with the support of someone you love, and that can share in the daily living expenses for you and your family as it grows. This is typically a time for asset accumulation which results in debt accumulation. The mortgage, car payments, and credit card debt can add up quickly.
The problem here is what will happen to your surviving loved ones when your income stream dies when you do. Having inexpensive term life insurance will guarantee that if you die unexpectedly, your surviving loved ones can maintain the household and continue with their lives because you will have provided the funds needed to for your family to move forward:
- Money to pay off the mortgage and vehicle loans
- Money to pay off personal and credit card debt
- Money to replace your income and continue paying living expenses
- Money for your children’s college funds and your spouse’s retirement fund.
Most people don’t know that at age 25, while they are building their business and their family, they can buy $1 million in life insurance for about $35 per month. Why take unnecessary financial chances when you can buy term life insurance and have financial peace of mind?
For individuals who think that life insurance only helps others, you’re wrong! Life insurance has living benefits that support the named insured while they are covered. In most cases, the living benefits are added to the policy using some of the riders that are available:
- Accelerated Death Benefit: This benefit is now part of most insurance policies, but when it is not, the applicant can easily add it as a rider. The accelerated death benefit provides for the insurer to pay a portion of the death benefit if the named insured is facing any of the following situations:
A terminal illness that will result in death in one or two years. This allows the policyholder to have access to significant funds in order to deal with end-of-life medical expenses and other costs.
Long-term care expenses that result from the policyholder having to enter into a long-term care facility as the result of a serious illness or injury.
- Disability Income Rider: A disability income rider is a very valuable add-on available to policy owners when they purchase a life insurance contract. A disability income rider provides financial protection to the owner of a life insurance contract that a disability will often incur.
- Return of Premium: The return of premium rider is a valuable rider that is particularly important for young adults who are likely to outlive their insurance coverage. This rider provides for the insurer to return all premiums that the policyholder has paid into a policy if the policyholder is still alive when the policy expires. This large lump-sum payment is non-taxable and would be a great way to supplement a retirement program.
Certainly, real estate agents understand the need for the death benefit provided by their life insurance but knowing these 3 reasons why real estate agents should buy term life insurance that benefit your business, your family, and you, make it an even more meaningful investment and method of mitigating risk.