estate_planning_9.23.15

Did you know that September is Life Insurance Awareness Month? The main reasons most people have life insurance are to pay final expenses (medical, funeral, burial, etc.), replace an income stream, and/or create wealth for our dependents after we die. Life insurance can also play an important role in business, estate planning, and charitable giving.

When considering whether or not you need life insurance, think about what would happen to your loved ones if you should die today. Most people would agree if you have children (babies through college age) you need life insurance, but those who depend on us financially may also include our spouse, aging parents, siblings, and other family members with special needs.

Here are some ways life insurance can be useful at various stages in our lives:

Young Single Adults:  If you have no dependents, you may only need enough life insurance to pay your final expenses and debt so your family will not have that burden. However, if you help support an elderly parent or another person, life insurance can replace that financial support.

Married with No Children: At this point, both spouses are probably working. If one should die unexpectedly, one income may not be enough. Life insurance can provide cash to pay final expenses, pay down credit cards and other loans, and help with mortgage payments and ongoing monthly expenses—at least until the survivor can make lifestyle adjustments. If you are thinking about having children in the future, it’s not too early to buy life insurance.

Married with Dependent Children: Adding kids to the scenario multiplies our financial obligations. In addition to final and regular ongoing expenses, life insurance can pay off a mortgage, fund college educations, and provide for the surviving spouse’s retirement, easing the financial burden on the surviving parent and even allowing a stay-at-home parent to remain at home with the children. If a stay-at-home spouse should die while the children are young, life insurance can provide the funds to hire someone to help with child care, shopping, cooking, transportation, cleaning, and other household responsibilities. At this stage, it makes sense to have life insurance on both parents.

Single Parents: Single parents already have the work and responsibilities of two people. Life insurance can provide the financial protection and security your family would need.

Business Owners: Business partners often have buy-sell agreements that are funded with life insurance; when one dies, the proceeds can be used to buy the other’s share of the business from the deceased owner’s family. “Key man” insurance can be purchased on the life of an employee or partner whose role in sales or management is very valuable to the business; if this person dies, money would be available to help keep the business going while a replacement is found. Life insurance can also create an inheritance for all children, including those not working in the family business.

Empty Nesters and Retirees: Life insurance can help provide for the surviving spouse’s retirement and potential medical and long-term care expenses. Existing and new life insurance policies can also be used to make charitable gifts, and to fund private foundations and trusts for future generations. Life insurance can also pay estate taxes, preserving the rest of the estate for family members.

For more information about Life Insurance Awareness Month and why the non-profit organization called Life Happens coordinates this month, please go to http://www.lifehappens.org/life-insurance-awareness-month/.

And for more information if you have adequate life insurance for your family and financial situation and based upon your planning goals, please contact Goosmann Trust Law Counsel.

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