Many people think about death and tragedy when they consider life insurance. Life insurance, though, is for the living. Without life insurance, when a family member dies or becomes disabled, the family could be left without the resources needed to keep their home and lifestyle.
In years past, it was suggested that a family have a life insurance plan that was 10 times the amount of their annual household income. With the economy the way it is today with house prices rising and interest rates that are low, the professionals are suggesting families have 20 times their annual household income. My friend’s company, who are plumbers in Smyrna GA just got all of this set up and they were happy that they finally did.
With those numbers in mind, it is easy to see that most American families do not have enough insurance. According to a study by a popular life insurance company, most households have a $320,000 gap between what they have and what they need.
There are many reasons that every family should have life insurance as part of their financial planning:
- Income replacement: the ability to earn a living is most people’s most valuable economic asset. When others are dependent on you, you need to consider what can happen to them if your income is gone. You can also implement your retirement income with a life insurance policy. This is especially helpful if your surviving spouse’s benefits will decrease when you die.
- It can cover long-term obligations and outstanding debts: when you don’t have life insurance, your family is left shouldering credit card debts, burial costs, and any medical expenses your health insurance company left uncovered using their own funds. It is possible to also use the death benefits of your policy to pay off college tuition, your mortgage, or supplement retirement savings.
- Use it for planning your estate: you can earmark the proceeds of your life insurance policy to pay taxes on your estate so that your heirs will not be left liquidating other assets to pay the taxes.
- Support a charity: you can designate all or part of the proceeds from your life insurance policy to go to your favorite charity or organization.
Talk with your life insurance agent to discuss options available to you and your family. You don’t want to leave your family struggling financially upon your death.