Lisa Schade

Broker, BS, CDPE, SFR

Life Insurance Strengthens Your Financial Safety Net

 


(Family Features) Protecting your financial security is about more than having money in the bank now and in the near future. It’s also about long-term financial protection for your family. However, a significant share of Americans is putting their financial security at risk.

It’s estimated that one in three U.S. households have no life insurance at all, and for those that do, they only own, on average, enough to replace their household income for three and a half years, according to LIMRA, a leading life insurance research organization. What happens to your loved ones after that?

“Life insurance can help replace your salary, pay off a mortgage, cover childcare expenses or protect college dreams if you pass away prematurely,” says Cynthia Tidwell, president and CEO of Royal Neighbors of America. “Families need to be protected from the unexpected.”

Royal Neighbors debunks misconceptions about life insurance by suggesting several options to meet needs in various situations. One economical option to consider is term insurance for families. Term insurance provides coverage at a fixed premium amount for a specific time period. Think of it as “renting” life insurance for a set number of years. It is an affordable choice to protect income and meet family expenses such as paying the mortgage or other debts.

Another option is to consider life insurance as a necessity for expenses beyond a funeral. LIMRA’s 2011 “Trillion Dollar Baby” report recommends that while typical families average enough coverage for three years, adequate life insurance protection starts at twice that, from seven to 10 years.

A third option is to purchase life insurance for yourself or your children as early as possible, because the cost is generally cheaper the younger and healthier you are, Tidwell explains. She recommends purchasing permanent coverage (whole life insurance) because policies will build cash value.

Alternatively, families might look for economical term policies that can be converted to more permanent insurance no matter what happens to your health. Experts suggest buying term and investing the rest; however, most people who buy term don’t invest the rest.

Source: Royal Neighbors

Reprinted with permission from RISMedia. ©2014. All rights reserved.

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