Young
Families Often Neglect Life Insurance
A recent study found that 75% of
people who died prematurely between the ages of 30 and 55 left their spouses
without adequate life insurance coverage.1
Failing to leave a sufficient life
insurance death benefit could require family members to sell personal assets
such as their home, tap into personal savings accounts, or take on additional
work in order to make ends meet. Life insurance can help provide protection to
avoid this type of financial loss.
Determining how much life insurance coverage you need to help ensure financial
security for your loved ones is an important step in safeguarding your family in
the event of a breadwinner’s premature death.2
What's Right for You?
Regardless of your age, the decisions you make about the type and amount of life
insurance coverage to purchase warrant careful consideration. Depending on your
specific situation, either term life insurance or permanent life insurance —
or a combination of the two — may be appropriate for you and your family.
Term or “temporary” life insurance provides a guaranteed death benefit for a
specific period of time, whereas permanent life insurance is designed to provide
lifetime coverage as long as premiums are paid. Permanent life insurance also
offers additional benefits, including the potential to accumulate cash value in
your policy.
Many factors play into the equation of how much life insurance coverage is
enough. These factors include current financial obligations such as mortgage
payments and credit-card bills, and anticipated future obligations such as
college tuition and retirement. Your existing resources and additional sources
of income are also important considerations when determining how much insurance
coverage to purchase.
Be Prepared
Many life-changing events happen unexpectedly. As your personal situation and
the needs of your family change, your life insurance coverage may need to be
adjusted. Periodically evaluating your coverage may help ensure your family’s
financial security.
1) National Association of Insurance and Financial Advisors (NAIFA)
2004
2) The cost and availability of life insurance depend on such factors as age,
health, and the type and amount of insurance purchased. Before implementing a
strategy involving life insurance, it would be prudent to make sure that you are
insurable by having the policy approved. As with most financial decisions, there
are expenses 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.
