General Life Insurance Topics

Six Things To Consider When Purchasing Life Insurance

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Will Rogers, the great Western poet and humorist is reported to have said, “A man deserves to die once without life insurance”. I’m not sure what prompted that bit of truthful humor, but when you consider all the conditions surrounding a death one can see how not having sufficient monetary coverage disrupts human lifestyle. Not only everyday activities are disrupted, but dreams and aspirations of the future are affected as well. If a person could only see how much impact their death has before the fact, there would be a much different approach to including a monthly payment for purchasing the instrument of life insurance. It would be right next to your monthly charitable contribution to a church of your choice. It may be necessary to juggle payments for other niceties like boats, snowmobiles, summer vacations, smoking and drinking, or other hobbies, to pay for the peace of mind one would feel knowing their loved ones will be financially attended to just in case.

Here are six separate financial concerns one should consider while determining the amount of insurance to purchase.

  1. Final Expenses. 

According to https://www.funeralhomess.blogspot.com/2013/03/funeral-costs-how, funeral expenses vary widely depending on just how elaborate you want to be in honoring the deceased. Regular funerals seem to run between $7,000 and $10,000 while a cremation may be as low as $495, so this is an item worth discussing with all parties involved. In that discussion it needs to be recognized that very sensitive feelings can be felt and expressed. Some may say just wrap me in a blanket and bury me in the backyard, making light of the final disposal of a person’s remains. If there is not a dissenting voice, maybe something as simple as a cremation may be appropriate. However, others recognize the funeral and all the events surrounding it are a major milestone in one’s life and the burial spot along with headstone and casket are necessary for closure for those still living. Some find that having a special place to go to remember loved ones is essential for their emotional health. In any event, much stress and heartache can be avoided if this conversation can occur while all impacted are still among the living.

 Another expense has to do with relatives and friends from far away places wanting to show their respect but not having the means to attend. Do you want to provide a fund which can be drawn upon to assist them in their journey? How about the lodging and food required by attendees? How about the expense of transporting the deceased to some distant resting place? Where our society is so mobile, we may have wandered from where we grew up and would like to return when our time is over. These issues can be handled as we wish, or they can be dictated by default.

Also, consideration should be given to eliminating some of the short term debt we always seem to be dealing with. Things like installment loans, credit card debt, commitments to things like Wounded Warriors and alma maters could be included in this process. 

       2. Education. 

In our modern world it is a fact of reality that most households depend on two incomes to meet the daily requirements of living. Death may mean the surviving spouse will need to retool so the lost source of income can be replaced. Also, if there are children yet to be raised, will there be a source of income to assist them when they reach the age where higher learning or training will be required. 

       3. Supplement to Social Security Benefits.

According to https://www.usda.gov/media/blog/2017/01/13/cost-of-raising-child, nearly $310,000 is required to raise a child. With so many industries cutting back on pension plans, one needs to consider carefully how to fill the void of lost income. Your philosophy of what you owe your children can greatly affect this decision. Many feel the only things they owe their children is a belief in God, a good name, and an honorable approach to work. Anything beyond these three things would be an extra bonus. Having some financial help could go a long way in helping the children to make their way in the world.

         4. Mortgage. 

Dorothy in the Wizard of Oz expressed “there’s no place like home, there’s no place like home” to convey this feeling of home. Permanent venue where no one can take it away from your family should be given the highest priority in planning for an unexpected death. Consider https://www.fool.com/millionacres/real-estate-financing/mortgages/heres-size-average in America the loan size average is $309,200 with an average loan percent between 3.5% to 7.39% with payments spread out over a 30 year period of time. What a burden one could lift from the shoulders of the surviving spouse if proceeds were made available to pay off that mortgage.

          5. Black-out Period. 

This is the time when social security proceeds are not payable to a surviving spouse. It is determined by the age of the youngest child and begins when the child reaches age 18 and continues until surviving spouse reaches age 65 or age 62 if one elects to take it at that age. No period of time is more frightening to a surviving spouse than this, for payment of every daily expense falls squarely on his/her shoulders. One must hope their ability to earn sufficiently is not cut short by disability or losing one’s job to layoffs or obsolescence of product.

           6. Retirement.

With life expectancy running into the 80’s, nearly a third of your life will be lived after your earning years having ended. With the reckless talk regarding the danger of losing social security benefits by the rising generation and the cut back of so many companies with their pension programs, one needs to take a hard look at how to plan for this event. It is suggested that the only difference between an old man and an elderly gentleman is how well he prepared for the future. There is a picture of a mailbox with openings at each end. On one side of the box is a healthy spry young man putting an envelope in the mailbox and on the other end is an old bent over man taking an envelope out of the mailbox with the caption “What are you sending ahead?” Enough said.

            7. Summary.

 It is sobering, and rightfully so, to combine final expenses, education, supplement to social security benefits, mortgage, black-out period, and retirement costs to realize this is no fantasy but real life expenses. The earlier one accepts the reality of these life monetary circumstances and plans for their solution, the greater can be the peace of mind one can have to enjoy the walk of life knowing if the unexpected happens dreams can still come true.

 

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