Too many learn the importance of life insurance only after the unthinkable has happened. On some level, we all are aware of our mortality, placing it into the “someday” mental file as something that is not to be thought about until some distant future. Unfortunately, that someday could be today or tomorrow or the next day as evidenced by the daily news casters reporting freeway fatalities, building fires, plane crashes, and any of a number of events that happen to people every day without warning.
Many view life insurance as a nice but unnecessary expense that is the first to go when times get tough economically. It seems to make sense when the immediate needs require priority attention. But is it really an unnecessary expense? If times are difficult now, consider the economic stress of losing one of the family breadwinners. What happens to the family then? Without the protection of life insurance, the grief of the loss of a loved one is compounded by the likely loss of the home and the lifestyle that has been earned with years of hard work. Life insurance for the parent who may not be a primary breadwinner ensures that those quality home and childcare responsibilities can be continued.
Life insurance isn’t an expense, it’s an asset, just as much as the equity in a home. Many have a life insurance policy provided by an employer, believing that they are adequately covered. Though it may seem like a significant sum of money, that policy amount is rarely enough to take care of family expenses and responsibilities for more than a short time. To make sure that you have an adequate amount of life insurance, it’s wise to look at the amount of life insurance as the principal to invest that can generate future income equivalent to the income being earned each year.
For example, if the income of the insured is $50,000 a year and conservative market investments such as mutual funds return an average of 5 percent a year, then the life insurance amount to ensure the continued income of $50,000 will be $1,000,000. To reach this figure, simply divide the income amount by .05, or 5 percent. If an employer provides a policy of $100,000, then the amount of insurance needed will be $900,000.
Don’t risk your family’s future by ignoring or putting off your need for life insurance. There are various types of policies available that will work within your budget to give you and your family the peace of mind of knowing that they will be taken care in if the unthinkable happens.Contact a professional for assistance with New York or New Jersey wills and life insurance today.