Often people take their life for granted and perceive that they would not die young. Death is an unavoidable and uninvited event that can happen anytime. Therefore it is advisable to be prepared for it and opt for life insurance policy. The life insurance policy cannot bring life to a lost loved one but it can help the family to survive financially. That is where I can help you with making this decision, and choose the policy that fits your family’s financial needs.
Could your family afford the funeral expenses? Have you left a complicated will, or perhaps no will at all? More importantly, what about your spouse, children, and other dependents? Are they counting on your paycheck in the years ahead to cover basic needs and/or future savings goals? If you are the primary caregiver to dependents, what will it cost to replace you with a paid provider, and for how long?
10 Reasons for Life Insurance:
1. Income replacement
Proceeds from a life insurance policy can step in to pay the bills when income from the insured is lost due to death.
2. Burial and other final expenses
The death of a loved one is hard enough without having to worry about your funeral costs, which can be well over $10,000
3. Mortgage protection
A family may lose their home if a life insurance death benefit is not available to help pay the mortgage.
4. Lock in a low premium at a young age
Over time, as people age, premiums increase. The best time for you to buy life insurance is today.
5. Transfer wealth to family
You can leave more money to your family, with a life insurance policy as part of your estate.
6. A tax-advantaged way to build cash value
You can realize tax advantages by utilizing policies that build cash value.
7. Provide funds for college education
College is expensive. Life insurance proceeds can help ensure that college loans are paid even if you aren’t there to help.
8. Meet evolving needs with a variety of product options
Needs change over a lifetime. You may want to look for a different type of policy or lower premiums to suit new life circumstances.
9. Supplement employer-provided life insurance policy
Employer-provided life insurance alone may not be adequate to cover your family’s financial needs.
10. Pay estate taxes and create estate liquidity
When an estate is inherited, certain taxes must be paid. Life insurance may step in to cover your estate costs.
(1 LIMRA (2012). Understanding Life Insurance Buyers and Non-buyers. 2 Source: Funeral Trade Commission)
Do You Have Enough?
A simple review of your current life insurance and future requirements can help determine how much life insurance you and your spouse need to protect your family properly.
Use the following guidelines to think about your Current Cash Requirements.
a. Final Expenses: This estimated cost includes medical expenses not covered by your healthcare policy (deductible plus any coinsurance), funeral expenses (estimate $6,500 to $10,000)* and probate costs.
b.Emergency Fund:Financial experts recommend that you save up to six month’s salary for any household or personal emergency that may arise. The emergency fund might be larger or smaller, depending on your family’s circumstances.
c.Mortgage Balance: It’s often desirable to select life insurance benefit large enough to pay off the mortgage balance.
d.Outstanding Loans:Determine total outstanding consumer debts (principal), such as auto loans, personal loans, credit card balances, educational loans, etc.
e.Education Costs: Calculate future college expenses for your children. The current average costs are approximately $38,589 per year for a four-year private school education and $17,131 per year per child for a four-year, in-state public school education. This includes tuition, fees and room and board. The cost of a college education can increase by 5% annually.**
- *Source: National Funeral Directors Association, 2010
- **Source: Trends in College Pricing 2011
Check out this useful Life insurance Calculator below!