In the event of the early death of a spouse, it is essential to consider the financial needs of surviving family members. It is unthinkable that the surviving family members would be forced to liquidate personal assets or lose their homes to make ends meet. It is essential in the present economy to protect our families from this type of financial hardship.
Recently, a study found that as much as 75% of people who died between 30 and 55 left their spouses without adequate life insurance coverage.1
Choosing the Right Coverage
Being well-informed when choosing what coverage is best for you and your family is essential. Two types to consider are permanent life insurance and term life insurance. Whether you decide on one type or the other will be based on your specific needs.
Permanent life insurance provides lifetime coverage as long as the premiums are paid when due and includes the added benefit of accumulating cash value in the policy.
Term or “temporary” life insurance covers a specific or designated period.
To fully understand your insurance needs, you must outline not only the present financial needs of the family but also those projected in the future. Financial obligations such as mortgage payments and other recurring debt payments are crucial to calculating the right amount of coverage needed. Future factors may include your children’s college tuition and your spouse’s retirement plans. These factors should be combined with your present source of income and your spouse, if any, to determine the right amount to purchase.2
Since we cannot predict the future and often life can change instantly, it is essential to plan ahead. It is important to follow these unexpected changes with the evaluation of your life insurance coverage. Such steps will ensure that your family remains financially secure.
1) National Association of Insurance and Financial Advisors (NAIFA) 2004
2) Life insurance’s cost and availability depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a life insurance strategy, it would be prudent to ensure you are insurable by having the policy approved. As with most financial decisions, expenses are associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications