Life Insurance: Is Term Insurance a Financial Necessity?

How do you know what life insurance does and how important it is?  During this month of September and Life Insurance Awareness Month, I've called upon financial professionals (financial advisors and life insurance agents) in the Chicagoland area whom I've come to know through networking and conducting financial literacy events to discuss life insurance planning.

First up is Ray Buckner, a District Leader and seven year veteran working with Primerica in Carol Stream, IL.  I asked him the following:

In your opinion, what does term insurance provide for today’s growing families?

Peace of mind.  In today's two-income families, most could not easily survive at their current standard of living if there was a loss of income due to a premature death. Term insurance is the strong foundation to your financial "house".

Of all the forms of life insurance available what is your suggestion for most families?

Definitely term insurance because it is more affordable for the typical family to own, and will allow them to have the proper amount of coverage they need to accomplish their goals.  Families that own permanent insurance are generally underinsured. Term insurance, which is pure protection, usually costs about one-third less.

If someone had a permanent life policy...how would you advise them?

I would advise them to have a financial checkup, to determine if they have the proper amount of coverage to accomplish their goals. A complete financial needs analysis will determine this. Buying term and investing the difference is a much better way to build financial independence for your family.

How can people keep their life insurance, in force, even during tough times?

Life insurance is one of the last things you want to get rid of.  Sit down with your agent/advisor to review your family budget. Often,  you’ll find ways to free up cash to redirect to keep your life insurance policy in force. Also, consider and be open to ways to bring in extra income.

Why is life insurance so important, especially during tough times?

It’s important during ALL times.  It's difficult enough for most families to make it on two incomes. You do not want to leave a financial burden on your loved ones.  The loss of a loved one is devastating enough. A "decent" funeral will cost $8,000-$12,000 in the Chicago metropolitan area. Most families cannot afford this as an out-of-pocket expense. We see it often in the news, where families have to set up "trusts" and ask for donations to help the family make it.

Big thanks Ray...

Think about this.  People evaluating an offer of employment often ensure they have health insurance benefits for them and their family members. Our state requires us to legally have car insurance when operating a vehicle.  Before officially buying a home or refinancing your mortgage, the bank does not release funds unless there is proper homeowner's insurance in place.

So if you have these other financial assets covered with insurance...the next common sense idea is to insure the greatest financial asset bringing income and providing a lifestyle to the family...you.

Moving on without considering this is often selfish while putting an unneeded financial risk and exposure to the people you love the most.  Not only would they face hard financial times without you...but possibly for many generations ahead.

Stay posted to the next post of deciding if term insurance OR permanent insurance is best for your family's situation.

 

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