When people have a family, they have to consider what would happen if they were to suddenly die or acquire a debilitating illness. They have to consider such things as mortgage payments, outstanding loans and other expenses, as well as their children’s future. Acquiring life insurance has become an essential part of raising a family.
Support your Family with Life Insurance
In the event that you can no longer support your family, life insurance will ensure that your family will be well taken care of and protected. Life insurance will generally pay off the house and any major outstanding debts such as car payments and any credit car loans, pay for your funeral and burial, and leave enough that your family can maintain a standard quality of life. With a good life insurance plan, your family will not have to worry about how they are going to survive.
Permanent Life and Term Life Insurance plans
Life insurance is an effective method of replacing lost income. In most cases, depending on the details of your insurance plan, your life insurance should be about double what you owe on your house. Insurance companies will generally offer a number of Permanent Life and Term Life Insurance plans. Permanent life insurance is where the policy is set for the life of the insured. The payout is assured at the end of the policy and the policy accrues cash value. Term life insurance is purchased for a specified period such as 5, 10, 15, 20, and even 25 years where a death benefit is only paid to the beneficiary if the insured dies during the specified period. It is recommended that a person acquires a policy that pays at least 5 to 10 times the annual salary.
Purchasing Life Insurance Equals Securing Your Families Future
Many people do not like to think about their death. It may seem unpleasant or even morbid. In order to protect our families, we unfortunately have to think about the financial implications of our deaths. As you begin to achieve important life goals such as owning a home, getting married, and having children, you should purchase life insurance. Acquiring life insurance ensures that you do not leave your family with a substantial amount of debt that could negatively affect their future. They will be able to grieve and heal without worrying about what the future will bring. It is a lasting gift you can leave them.
1/3rd of US hoseholds (35M) have no life insurance protection whatsoever
– and 58 million are under insured — the highest level ever measured
According to the 2010 Life Insurance Ownership Study conducted by the Life Insurance and Market Research Association (LIMRA), 35 million households in America, about one-third of the total number, have no life insurance protection whatsoever, and 58 million are under insured — the highest level ever measured.
Adequate life insurance protection was one of the first casualties of the recession that began in 2009. As families trimmed expenses, more and more canceled their life insurance policies, a move that falls under the category of “penny wise and pound foolish.” While the immediate monetary savings might help the monthly budget, the long-range dangers for families are truly frightening.
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What Does Life Insurance Do for a Family?
If the primary wage earner in the family dies, life insurance is a vital component in the resulting financial transition. Life insurance benefits:
● Help to address the staggering costs of burial. (The price of an adult funeral in the U.S. climbed from an average $708 in 1960 to $6,560 in 2009.)
● Help to preserve existing financial assets so future reserves are not drained.
● Help to make further savings possible for goals like education for the children.
● Help to preserve the family’s existing lifestyle.
Generationally, there seems to be a different understanding of the importance of life insurance for households with children.
● Generation Y born from 1979 to 1994 is 22% insured.
● Generation X born from 1965 to 1980 is 43% insured.
● Baby Boomers born from 1946 to 1964 are 75% insured.
The decreased emphasis on life insurance in families with young children puts future goals for those children at risk.
The Recession Has Deepened the Dangers of Having No Life Insurance
The number of long-term unemployed in the United States is at its highest level since 1948. Six million Americans or 42.9% of those without a job in September 2011 have earned no paycheck in 27 weeks or more. The national unemployment rate is 9.1%. These are people who have completely depleted their reserves. If one or the other parent were to die, not only would the standard of living for the family plummet even farther, but no future milestones for the children, like college, would likely be possible.
Cheap Life Insurance is a Reality
Financial advisers and insurance specialists have all manner of elegant formulas to determine how much life insurance a person needs. The truth is that in this economy, no one is likely to be able to meet those calculations. This does not, however, mean that no life insurance protection for your loved ones is possible.
Although there are many forms of life insurance, the quickest way to get inexpensive coverage and protection for your family is a term life policy. This will afford 10-30 years protection at highly affordable rates. It is completely reasonable and attainable for a 40-year-old man who doesn’t smoke to buy $1 million in coverage for less than $100 a month.
The question is not so much why have life insurance for your family, as why not given the obvious benefits and the availability of cheap life insurance policies.