April is National Financial Literacy Month. The purpose is to educate Americans on some important but often overlooked financial issues. The death of a parent may be one of the biggest threats that family can face, especially if there are minor children in the home.
Despite the threat posed by death, studies show that many households have little or no life insurance protection. A 2015 study from Bankrate found that only 60 percent of Americans had life insurance, and half of those had less coverage than they needed. Among families with children, 37 percent had no life insurance protection, while 32 percent had less than $100,000 in coverage.1
The reasons for having insufficient coverage vary. Some people feel they aren’t likely to die anytime soon, so insurance protection is unnecessary. Others may underestimate just how much money their dependents would need. Some believe life insurance is too expensive for them to afford.
If you’re not sure whether you have enough coverage, it can be helpful to examine your needs. Below are a few common needs and goals that can be achieved with life insurance. If you haven’t taken steps to protect your family, now may be the time to do so.
It may not be pleasant to think about your own funeral. However, if you pass away, your family will likely bear the burden of paying for your services. Even a modest funeral and burial can cost thousands of dollars. Without life insurance, your family may be forced to pay this cost out-of-pocket during a sensitive and emotionally fragile time. Life insurance is an easy way to cover these costs and relieve your family of the burden.
Does your family depend on your income? How would they support themselves without your earnings? Life insurance is often used as an income-replacement vehicle. You can use life insurance to provide your dependents with a lump sum of money.
Even if you don’t contribute income to the household, you probably make other contributions. For example, do you stay home to care for children while your spouse works? Do you clean, prepare meals or take care of home maintenance? How would your family cover those tasks if you were to pass away?
Think about what challenges your spouse may face without your contributions. He or she may have to hire a nanny or send your children to day care, either of which would come with high costs. He or she may need to hire a housekeeper or may spend significantly more on lawn care or dining out. Again, life insurance can be used to help cover these costs.
Your family likely may have debt like a mortgage, car loans, credit cards and more. Given all the other challenges your family may face after your death, you may want to relieve them of the burden of paying this debt. For example, perhaps you want to pay off the mortgage so your family can be certain they could stay in the family home. Life insurance could be used to pay off these debt balances after you pass away.
Do you have sufficient life insurance coverage for your family’s goals and challenges? If not, let’s talk about it. Tommy Mai Financial can help you analyze your needs and develop a protection plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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