It has become somewhat of a custom for me to write about life insurance concepts during the month of September. And, my comments come fairly easy because I believe in life insurance and have seen the many ways in which it has held families together during financial uncertainties. My comments for this month are also prompted in good part to the publicity generated by Life Insurance Awareness Month (LIAM) and the great work of the non-profit organization sponsoring it, the Life and Health Insurance Foundation for Education, or LIFE. Simply put, LIAM is a nationwide public awareness effort to remind the public of the essential role that life insurance planning plays in the overall financial arena of our nation’s economy. LIAM, additionally, is a means of informing consumers of the facts and issues involved in purchasing this critically important form of financial protection.
What I hear most often with life insurance concerns questions such as how much do I need, what are recommended ways to establish beneficiary designations and what type of protection best suites my personal situation. And, I will tell you since no two people have the same exact financial makeup, conversely no standard answer fits every personal or business situation that exists. Because of the fact that more questions tend to be raised, I thought it might be interesting for this month’s comment to bring up a few we hear on a consistently regular basis. Maybe a few answers could help with your own personal planning:
>> How Much Life Insurance Do I Need? Determining how much life insurance you might need requires a careful checkup of your current and future financial obligations as well as a good understanding of the monetary resources available for surviving family members to draw upon to meet remaining obligations. Coming up with the difference between the two (that being; obligations owed minus the assets your family has) is the approximate amount of additional life insurance you need. If this sounds confusing, don’t worry. You’re not alone. That’s why the LIFE Foundation offers through its website (wwww.lifehappens.org) a Life Insurance Needs Calculator you can use to estimate what may be required.
>>How Should I Name my Beneficiaries? There are three recommendations that LIFE suggests:
No. 1 — Always name a “contingent” or secondary beneficiary just in case you outlive your first beneficiary.
No. 2 — Select a specific beneficiary, rather than having the proceeds paid to your estate. One of the greatest advantages of life insurance is that it can be paid to your family immediately. If, however, it is payable to your estate, it will have to go through probate with the rest of your assets.
No. 3 — Be very specific in wording beneficiary designations. Saying “wife of the insured” could result in an ex-spouse getting the proceeds. Naming children specifically may exclude those born later. A better options is: children of the insured.
>> What optional provisions to life insurance merit consideration? Ultimately, it depends on what your budget allows but there are a couple riders you should at least consider.
No. 1 —A disability waiver of premium rider stipulates that if you become totally disabled for a specified period of time, you don’t have to pay premiums for the duration of the disability thus keeping your life insurance coverage in force.
No. 2 — Accidental death coverage is another common rider that can pay an additional benefit in case of death by accident.
No. 3 — Accelerated death proceeds are relatively new and allow, under certain circumstances, for you to receive the proceeds of your coverage before you die. This could include the need for financial assistance with long term care or confinement to a nursing home.
The Mayo Clinic lists the “Three Big End of Life Questions” as;
No. 1 — What was the meaning of my life
No. 2 — Did I make a difference in the world?
No. 3 — What is my legacy to the world?
There’s no question that life insurance provides for life’s uncertainties. But most importantly, Life Insurance offers genuine peace of mind by financially protecting one’s family and heirs. It is a gift of unselfish love in the truest sense of the word. As the LIFE Foundation has stated, Life Insurance is not for the people who die, but rather for the people who live.
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