Life is a series of milestones, and at each stage the financial protection of assets, dreams, and goals is important.
However, many American families are at risk of not being able to pay a mortgage, or childcare expenses, or save for college or retirement if something were to happen to a family’s primary income earner.
Prepare for the unexpected
Whether you are raising a family, moving to a larger home, or planning for college tuition payments and retirement, life insurance is an important consideration for protecting your family and assets. LIMRA, a life insurance industry research organization, reported in 2011 that one in three U.S. households has no life insurance at all. For those that do, life insurance holders only own enough on average to replace household income for 3 1/2 years, while the recommended industry rule of thumb is around seven to 10 years.
“Life Insurance is absolutely critical for families who want to secure their financial futures,” said Cynthia Tidwell, CEO and president of Royal Neighbors of America, one of America’s first women-led life insurers. “At every stage of your life, consider who depends on you and what expenses will need to be met to protect the ones you love. Women in particular undervalue their worth in a household and also need coverage.”
Protection for every family
According to a 2013 Pew study, women are the sole or primary breadwinners in a record 40 percent of U.S. households. LIMRA also recently reported women’s life insurance coverage is only 69 percent of the average coverage on men.
“Whether they work in or outside the home, we challenge women to value their worth and get life insurance coverage so they can protect their family’s finances if something were to happen,” Tidwell added.
Four ways life insurance protects families
1. Pays your debts.
If something happens to you, life insurance can help pay off debts such as a mortgage, credit cards, auto, or other loans. Consider life insurance as part of your financial plan.
2. Covers daily living expenses.
Don’t forget daycare, tuition, grocery, and energy bills. According to LIMRA, in 2011 nearly two-thirds of financial decision-makers admit they would have trouble paying everyday bills within a few months of a spouse dying prematurely.
3. Helps save for the unexpected (and expected).
Many different life insurance policies have cash savings options to help pay for expenses such as college tuition, weddings, or starting up a business. Look for permanent or whole life policies with cash value accumulation options.
4. Pays for funeral expenses.
No one likes to leave a family with expensive funeral costs. The average funeral costs about $7,000, as estimated by the National Funeral Directors Association in 2012.
How much life insurance do you need?
Log on to www.royalneighbors.org for more information. You’ll find financial information, an overview of life insurance options and interactive calculators to determine the life insurance coverage that’s best for you, retirement savings and how much to save for college expenses.
Types of Life Insurance
Life insurance is an important part of financial planning, helping those you leave behind in the event of an untimely death. Life insurance can help pay off mortgages, loans, and college tuition or ensure your family can maintain their quality of life. The types vary and it is recommended that you speak with an insurance professional to ensure you have the right coverage for your life stage.
Term insurance provides coverage at a fixed premium amount for a specific period of time. It is often the first and most affordable choice families make to protect assets, like a home, for 10, 20 or 30 years. Term insurance may be right if you are just getting started and your budget is tight; you want to secure your home by choosing a term period to protect mortgage payments; or you want to protect those who depend on you until they can provide for themselves.
Whole life insurance is permanent insurance. It provides lifelong coverage for your entire life, at fixed payments that are level, predictable, and do not increase. If you make payments on time, your coverage cannot be cancelled, even if your health changes. This type of policy can also accumulate cash value that is available in the form of a loan for expenses such as college costs, a wedding or other unplanned needs.
Universal life insurance adds flexibility to the benefits of permanent life insurance. Universal life (UL) products can provide financial protection with permanent life insurance, but offer flexible options. You can often tailor your premium payments, or build cash value for other financial goals such as college or retirement or change the death benefit.
Quick Checklist
Be prepared for the unexpected by taking these important steps to make sure your loved ones are protected financially.
Verify your beneficiaries. It’s important to review your beneficiaries periodically to ensure the information is up to date.
Select a durable power of attorney. Appoint a trusted person to make financial or healthcare decisions on your behalf.
Update your will. Make sure your will accurately reflects any substantial changes in your family or assets.
Compile a list of documents. Create a master list outlining how to access your financial, personal, and legal records.
