Page 30 - Book12E

Life is really simple, but we insist on making it complicated.
— Confucius
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expenses, mortgage payments, and college savings. What’s more, there is no federal income tax on life insurance benefits.
To figure out if you need life insurance, you need to think through the worst-case scenario. If you died tomorrow, how would your loved ones get along financially? Would they have the money to pay for your funeral costs, medical bills, taxes, debts, lawyer’s fees, etc.? Would they be able to meet ongoing living expenses like the rent or mortgage, food, clothing, transportation costs, healthcare, etc? What about long- range financial goals? Without your con- tribution to the household, would your surviving spouse be able to save
enough money to put the kids through college or retire comfortably?
The Washington, D.C.-based Life and Health Insurance Foundation for Education has outlined the following scenarios to help you under- stand how life insurance might apply to your particular situation.
• You’re Married—Most families depend on two incomes to make ends meet. If you died suddenly, could your family main- tain its standard of living on your spouse’s income alone?
• You’re a Single Parent—As a single parent, you’re the caregiver, breadwinner, cook, chauffeur, and more. Yet nearly 40% of sin- gle parents have no life insurance whatsoever, and many who do have coverage say they need more.
• You’re a Stay-At-Home Parent—Just because you don’t earn a salary doesn’t mean you don’t make a financial contribution to your family. Childcare, transportation, cleaning, cooking and other household activities are all important tasks, the replace- ment value of which is often severely underestimated. Some sur- veys have estimated the value of these services at over $40,000 per year. Could your spouse afford to pay someone for these services?
• You’re Single—Most single people don’t need life insurance because no one depends on them financially. But there are
Life Insurance Advantages and Disadvantages