What Is Life Insurance?
Life insurance offers a way to replace the loss of income that occurs when someone
dies (usually the person who produces the majority of income in a family situation).
It is a contract between you as the insured person and the company or "carrier" that
is providing the insurance. If you die while the contract is in force, the insurance
company pays a specified sum of money free of income tax - "cash benefits" -
to the person or persons you name as beneficiaries.
A good life insurance program does more than just replace the loss of income that occurs
if you die. It should also provide money to cover the new costs that arise after your
death - funeral expenses, probate costs, the need for housekeepers and child care, and so on.
These cash benefits should provide for your family's future needs as well, including college
education for your children and part or all of your spouse's retirement needs. In almost all
cases, your beneficiary can use the cash benefits in the way he or she sees fit, without
Do You Really Need Life Insurance?
If there is someone who would suffer economic hardship if you died,
then the answer is yes... you need life insurance! Families with young children have
a clear need for life insurance. If both spouses work, the loss of one income
will cause the family immediate economic hardship and make it harder for them
to realize future goals, such as paying for the children's' education.
But even if one spouse works "inside the home" and doesn't bring in a formal income,
his or her death will require the surviving spouse to hire child care, housekeepers
and other professionals to help run the household - and that can be a significant new
If you are married without children or single, then you may need life insurance
to protect your partner or surviving family members against the costs associated
with your death. Funeral expenses, probate and administrative fees and outstanding
debts are costs that all of us must consider, costs which can add up quickly. Unless
you already have sufficient financial resources, your survivors will probably need
life insurance to cover these expenses.
What Happens To Your Family If You Don't Have Enough Coverage?
Under any circumstances, the loss of a loved one is a traumatic experience. But, if your family is also
left without sufficient money to meet basic living needs or prepare for future
goals, they will have to cope with a financial crisis at the same time. Depending
upon their current financial resources and ability to "get back on their feet"
emotionally and financially, your family might be forced to move to a less desirable home
or community, abandon education and career plans, reorder family priorities
(such as the amount of time spent with the children) and, in general, cut back on the
quality of life you have worked hard to achieve.
Your family might even be forced to go into debt simply to pay the expenses,
like funeral costs, and medical bills that result from your death. A moment's reflection
will tell you that the lack of sufficient life insurance coverage when a loved one dies can
have devastating consequences for a family...consequences that can last for years.
As always, your CLICO agent can help you determine how much and what type of
insurance product is best for you and the people you care about by reviewing your present
financial plan and priorities for the future. Call or visit us at any of our conveniently
located Branch Offices.