September is Life Insurance Awareness Month, which gives us a reason to talk about a subject that some try to avoid. Life insurance can conjure up dark images. Many people are jarred into realizing the importance of buying life insurance after a close friend or family member passes away, or even after hearing a news story about a tragic death that hit close to home. The reality is that we are all mortal, so it makes sense to prepare for a time when your loved ones will be left to fend for themselves without you. Consider these important questions to determine your need for life insurance.
How Will Your Loved Ones Live Without Your Income?
Many households run on a paycheck to paycheck basis. Some people may have a modest amount of savings, but it may take two incomes to pay the monthly bills. Your spouse and children may quickly run out of money without your income to support them. Life insurance benefits are most commonly used to supplement lost wages and to eliminate debts after an income-producing adult passes away. By eliminating debts with insurance proceeds, your loved ones will need less money each month to pay bills. Some people will purchase enough insurance to pay off all outstanding debts, including the home mortgage. The surviving spouse may even be able to support the family through his or her income alone after the debts have been eliminated. Others will purchase enough coverage so that the proceeds can be invested to generate supplemental income.
How Will Your Spouse Be Able to Retire?
While some life insurance is needed to help your loved ones to survive on a monthly basis, you should also consider retirement planning for a surviving spouse. Your income may currently be instrumental in your spouse’s ability to fund a retirement account. Without your income, your spouse may be forced to continue to work for many years past the planned retirement age, creating an unnecessary hardship. It may be wise to purchase extra coverage to cover the cost of funding a retirement account.
Do Your Kids Need Financial Assistance Getting Their Adult Lives Started?
If you have kids, you may be well aware of their financial dependence on you, and this will often not simply evaporate when they turn 18. Many children need financial assistance buying their first car, paying for their wedding, or paying for college. Some parents purchase additional death benefits so that their kids’ lives are not financially impacted by a death.
How Much Coverage Do You Need?
This is a complicated question; ultimately it depends on the life insurance needs and objectives for you and your family or loved ones. Funds can be used for income replacement, or strategically in different ways, such as to purchase income-producing assets, to pay off debts and more. Your financial objectives for life insurance, as part of your overall financial plan, must all be taken into account.
Time to Take Action!
Death is something that can unfortunately happen at any time. Some people will live well into their 90’s or beyond, but others have a life that is cut short far too soon. Because you cannot predict what will happen, or when life insurance benefits will be needed, it may be a smart decision to purchase coverage. Your life insurance strategy is important whether you are single, have a young family, an established family, are an empty-nester or retiree, or if you own a business.
Ready to Take The Next Step?
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