According to studies on insurance in the U.S., it is revealed that around 56% of American families do not have sufficient life insurance coverage.  This is a damn shame. We can buy fancy cars and houses but not have the protection for our spouses and kids if we die. 

Despite, negative remarks about life insurance, its advantages cannot be diminished especially when your spouse does not work and you have young children.  If you think things are tough now, how do you think they would be without your primary income source? I have never heard anyone say, “He left me too much life insurance money”.  It’s always, “He only left us a little life insurance money” or “He didn’t leave any insurance money”.  In addition to loving my family too much, I refuse to have anyone talk about me when I’m dead and having the topic basically be about what a bum I was by not leaving my wife and kids with enough money to maintain their lifestyle.  And I certainly don’t want them taking up a collect to bury my butt.

If your spouse stays at home and takes care of the kids, you should consider a policy on them as well.  Because if they die, you will have to find a way to replace the services and care they provided to you and the kids.  I know a guy with 6 kids and a wife who does not work other than taking care of the kids and house.  That guy would be S.O.L. if his wife were to die while the kids are young;  all the kids are under age 13.

Now that I have or should have “guilted-you- out”, let me explain a little about the basics of life insurance.  One of the best financial tools of modern times is life insurance.  With life insurance you can leverage your money by buying dollars with pennies.  Where else can you buy $1,000,000 for as little a $.39 on the dollar?  When you choose the right kind of policy and it is used correctly, it can offer you and your loved ones security and a much better life in the event of a premature death. 

Life insurance is a contract made between the insured (you) and the insurer. The insurer is the company that agrees to pay a certain amount of money upon the occurrence of the insured’s death or other events such as a terminal or critical illness.  In return, the insured or policy owner agrees to pay a stipulated amount called a premium to the insurer, generally, at regular intervals.

What are the benefits of a life insurance?

1. It replaces the income required by the family to maintain the standard of living after the death of the wage earner;

2. It is able to pay mortgage loans and other personal and business debts and for creating new funds (creating wealth);

3. It generates funds for the children’s education;

4. It pays final expenses for funeral and taxes; and

5. It creates emergency funds for the family or the fund to cover a family member’s special needs.

As your family grows and your needs change you should re-evaluate you insurance needs.  Just consider, if one of the income earners dies, there will be a great strain upon the remaining spouse; meaning a financial devastation and a turnabout in life style in addition to the emotional strain if there is no plan for the replacement of income.

You can determine if your life insurance is adequate by going over these considerations.  Calculate your required life insurance, (you can use an online calculator here) and determine how much your family needs annually.  You should account for both living expenses and any big, one-time purchase, such paying off a house.  Make sure that there is a complete provision for the care and education of all your children; that all contingencies are met so your family can face their responsibilities without you.  If you already have coverage, consider boosting your coverage for a short term with a policy for 10 – 15 years until your youngest children become financially dependent.

There are different types of policy available so be sure to consult with an experienced agent to find a plan that works for you.  Please don’t deal with anyone with less than 5 years of experience.  For more information leave a comment.

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