Life insurance may be one of the most important purchases you'll ever make. In the event of a
tragedy, life insurance proceeds can help pay your bills, continue a family business, pay for future needs like your children's education,
protect your spouse's retirement plans, and much more.
The answer isn't really how much life insurance you need... it's how much money your family will
need after you're gone.
Life insurance proceeds can help pay immediate expenses including uncovered medical costs, funeral expenses, final
estate settlement costs, taxes and other lump-sum obligations such as outstanding debts and mortgage balances. They can also help your
family cover future financial obligations like everyday living expenses, money for college or your spouse's retirement, and so much
But how do you know if you need $100,000, $500,000, $1 million or more? Our Advice & Guidance
Center is interactive and offers you planning tools, calculators and personalized resources to help you get a rough estimate of how much
It's quick and easy! Choose where you are in life by selecting the life event or life stage that is important to
you. We can then begin tailoring your site experience based on your selection.
Life Stage: Single (no children)
If no one depends on you for financial support, your path to financial security should be relatively
short and smooth. But it is a journey you should definitely begin. Putting off the basics – reducing debt, starting a savings program,
planning for retirement – only makes things more difficult and expensive in the future. The sooner you start, the better off you are.
Some single people don't need life insurance because no one depends on them financially. But there are
exceptions. If you provide financial support for aging parents or siblings, you should consider it. It may also be appropriate if you have
substantial debt you wouldn't want to pass on to surviving family members if you were to die prematurely.
Life Stage: Single parent (with children)
As a single parent, you're the caregiver, breadwinner, cook, chauffeur, and so much more. Yet nearly
four in 10 single parents have no life insurance whatsoever1, and many with coverage say they need more than they have. With so much
responsibility resting on your shoulders, you need to make sure that you have enough life insurance to safeguard your children's financial
Life Stage: Married (no children)
When you're married, you share everything with your significant other, including your financial
obligations. Many people mistakenly believe that they don't need to think about life insurance until they have children. Not true. What if
one of you died tomorrow? Even with the surviving spouse's income, would that person be able to pay off debts like credit card balances and
car loans, let alone cover the monthly rent and utility bills?
If you're planning to have children, you'll want to buy life insurance right away and not wait until the
mom-to-be is pregnant. Some companies won't issue a policy to a woman during her pregnancy. Since health complications sometimes arise,
they'll want to wait until after the baby is born to issue the policy. Buying insurance before a baby is on the way helps avoid this
Life Stage: Married (with children)
When you are first married and starting a family, you face perhaps the most daunting financial pressures
you'll encounter at any stage of life. A new home and young children bring with them a crush of expenses, even though you probably are
still early in your career and far from your peak earning potential. Meanwhile, you also need to start saving for the future – college
seems just around the corner for your kids, and it's never too early to start planning for your retirement. How can you address all these
obligations at once?
The key is to understand that you are at the beginning of a long-term building process. Financial
security comes from a combination of insurance, savings and investments that are accumulated over time. Start small and cover all you
bases. As you progress in your career and your income grows, your financial security will grow as well.
The first step in establishing your financial security is to confront the biggest threats to it. That
requires asking yourself some tough questions: What would happen if you or your spouse became sick or injured – or died? What if you lost
your job? What if your home was seriously damaged in a storm or by fire? What if you were in a serious auto accident? All of these
situations are potentially devastating to your family's financial health. That's where insurance comes in.
Life insurance can provide your family members the resources to maintain their lifestyle when you die.
It can replace some or all of your income. It can also pay off debts and cover funeral costs. It can even help to fund longer-range needs
like college tuition or retirement.
Life Stage: Stay-at-home parent
Just because you don't earn a salary doesn't mean you don't make a financial contribution to your
family. Child care, transportation, cleaning, cooking and other household activities are all important tasks, and their replacement value
is often severely underestimated. Surveys have estimated the value of these services at more than $40,000 per year.2 Could your spouse
afford to pay someone for these services? With life insurance, your family can afford to make the choice that best preserves their quality
Life Stage: Small business owner
Besides taking care of your family, life insurance can protect your business. What would happen to your
business if you, one of your fellow owners, or perhaps a key employee, died tomorrow?
Life insurance can help in a number of ways. For instance, a life insurance policy can be structured to
fund a “buy-sell” agreement. This would ensure that the remaining business owners have the funds to buy the company interests of a deceased
owner at a previously agreed upon price. That way, the owners get the business and the family gets the money. To protect a business in case
of the death of a key employee, “key person insurance,” payable to the company, provides the owners with the financial flexibility needed
to either hire a replacement or work out an alternative arrangement.
Life Stage: Grown children
Now that your children are self-supporting, you may feel you no longer need the life insurance policy
you bought when they were babies. But if you are like many families, you may have wiped out your savings to put your kids through college.
Now you need to begin saving aggressively for retirement. Life insurance can be an important part of a retirement savings program.
At this point you may have 10 or 20 more years of an active working life left. These are likely to be
the most productive and highest-earning years of your life. What would happen if you died suddenly? Your spouse, deprived of the benefits
of your most productive years, could be forced to drastically cut back on his or her retirement plans. Life insurance proceeds, invested
wisely, could provide your spouse a stream of income for several decades.
Life insurance can also ensure your spouse is not saddled with debts if you should die prematurely. In
the past, a family's home mortgage was largely paid down by the time the kids were in college. But nowadays many people have cashed out
some or all of their equity to finance a better lifestyle or perhaps a second home. Life insurance can ensure that your spouse can continue
to live in the style to which he or she has become accustomed.
Life Stage: Retired
To many, retirement signals a period of downsizing. Whether or not that's true for you, it's important
to recognize that when you retire your accumulated wealth is probably at its peak. Retirement nowadays can last decades, and age brings on
many potential threats to your financial health. There are a number of steps you can take to ensure your money lasts as long as you do.
The demise of traditional pension plans means many retirees face the frightening possibility of
outliving their savings. Social Security is there as a safety net for most people, but it was never meant to be a full retirement plan. One
way to ensure that your money – and your lifestyle – will last as long as you do is to purchase an annuity.
Think of an annuity as a do-it-yourself pension plan. You provide a lump sum of money to an insurance
company and in return you get a guaranteed stream of regular payments for the rest of your life (or for some specified period). Ideally,
you should commit only a portion of your retirement savings to an annuity and keep the rest in other types of investments, such as stocks
and bonds that can grow over time and protect you from inflation.
Life Event: Getting married
Driving away from the reception in a blue convertible with balloons flapping in the wind, you're headed
for a bright future. You both dream of a nice home, a good education for your kids and a comfortable retirement.
Enjoy these early carefree days, but make sure you talk to an insurance professional soon. As a married
couple, you share a life together, but you also share each other's financial obligations.
What if one of you died tomorrow? Would the surviving spouse have enough money to pay for your final
expenses, pay off any debts, and buy some time to adjust to a new lifestyle? Life insurance can help ensure that these financial goals will
be met in the tragic event of a premature death.
Life Event: Buying a home
You sign that huge check, and your realtor hands you the keys to a classy Victorian three-bedroom on a
nice lot. Mortgage payments are a little daunting. Now, it's time to make sure you've thought ahead.
What if the worst happens? Could your spouse manage the mortgage payments without you? What about
maintenance, utilities and taxes? How long before your dream house is back up for sale?
If tragedy strikes, losing the family home is the last thing you'd want to have happen to your loved
ones. Adequate life insurance coverage can help keep the family you love in the home they love.
Life Event: Having a child
It's time to start thinking about whether to wallpaper the extra bedroom in pink or blue ... your baby is on
the way! With your growing family, you're probably doing all you can to save and invest for the future. But is that enough?
You have big plans for your kids and want to see them realize their hopes and dreams. It's hard enough
to make that happen with you in the picture. But what if you or your spouse – or both of you – were suddenly out of the picture? From
diapers to diplomas, would there be enough income to pay for day care, a college education, and everything in between?
Your children are your greatest responsibility, and life insurance can help them grow up in a stable
environment where they are physically safe and financially secure.
Life Event: Taking on debt (paying off credit)
These days, living with debt seems to be as American as baseball and apple pie. We rely on credit to
help pay for things like cars, home improvements, education expenses and vacations. We also pile up sizeable credit card bills to pay for
everyday living expenses. Living with debt is a way of life for many of us. But that's not necessarily a bad thing, as long as you have a
plan for managing your debt.
First, make sure you are living within your means. Never assume a debt load that you can't keep up with.
Second, it might make sense for you to consolidate your high-interest debt to a single loan or credit card with a lower interest rate. And
finally, consider how your family would manage the payments if something would happen to you. You should have at least enough life
insurance to pay off all your outstanding debt and provide a cushion to help your family make a new start.
Life Event: Planning for college
With college costs skyrocketing, you need to plan earlier and more carefully than ever to achieve your
college savings goals. You'll need a disciplined approach to saving and investing, as well as a smart risk management strategy to ensure
that your goals will be achieved, even if you aren't able to complete them due to illness, accident or death.
Federal and state-sponsored college savings programs allow you to save and withdraw tax-free. Education
IRAs (now called Coverdell Education Savings Accounts) and Section 529 plans are two such programs. Permanent life insurance is another
option to consider because it also allows you to save and withdraw tax-free, while providing important protection for your college savings
Insurance forms the foundation of a sound college funding program, helping ensure that your savings plan
won't die or become disabled if you do. Life insurance can complete a college savings plan that hasn't matured, while disability insurance
can help make sure that you can continue to set aside money for college, even if you're unable to work.
Life Event: Coping financially with a job loss
If you've recently lost your job, or if you fear you are about to become unemployed, it's important to get
a handle on your finances. Here are some tips to help you deal with your financial obligations and keep your credit score intact while you
work to get back on your feet again:
- Don't panic. Job loss is a fact of life, even in the best of times. Take a deep breath and realize that you'll get
through this, even though things may appear gloomy. In fact, losing your job may be an opportunity to land a better job or a new career.
- Don't make any rash decisions. It's easy to make hasty financial decisions when you're stressed that turn out poorly.
Don't cash in your retirement plan, sell
long-term investments or move until you've worked out a plan to deal with your reduced income.
- Promptly file for unemployment benefits. Not everyone is entitled to unemployment insurance. To qualify, you'll want
your employer to confirm that you were laid off instead of resigning or being fired for cause.
- Be careful with your severance package, if any. Your employer may offer you a severance package that extends your
salary and possibly your benefits for a certain period of time. Don't sign until you take it home and review it closely. Consult with a
benefits attorney about anything you don't understand. Review your employee handbook to see if any benefits are promised to departing
employees. Make sure you are paid for unused vacation time. Learn what fellow laid-off employees have been offered, and don't be afraid to
negotiate the severance package. You may have more leverage than you realize.
- Start looking for work ASAP. Many newly-unemployed people believe they'll find a job quickly, and decide to take a
short vacation before starting their job search. This is usually a bad idea. If unemployment is high and the economy is struggling to
recover from a downturn, it will be harder to land a new job than you think. Potential employers probably will not like to see a six-month
gap in your employment history. Also, while you're soaking up the sun, you are draining important financial resources that you could put to
- Maintain health insurance. Dealing with major medical bills without insurance is a financial disaster. You can switch
to a working spouse's health insurance plan, typically within 30 days of your job loss. You can also obtain regular private coverage, or
continue employer group coverage through COBRA. COBRA can be expensive, and you may find it less expensive to buy a short-term health plan
or high-deductible catastrophic policy on your own.
- Continue life and disability insurance. You may be able to convert a group term life insurance or disability policy at
work to individual coverage. You'll have to pay the premiums but it's important to continue.
- Avoid dipping into retirement funds. A job loss is usually temporary, while your retirement may last 20 or 30 years.
Pulling out tax-deferred funds to pay for today's bills is a bad idea unless you've exhausted all reasonable alternatives. You'll need to
pay income taxes on the withdrawal, and possibly a ten percent penalty tax if you're younger than 59 1/2.
- Talk to your family. Tell any family members who depend on you financially how the job loss will affect family
spending. Ask them for budgeting help. This can help ease their anxiety, especially if you have to make a major change such as moving.
- Make retirement plan decisions. Losing a job will force you to make some important decisions regarding any retirement
account you had at your former employer. Typically, you will have four choices: cash out, roll the funds into a new employer's account,
roll the funds into an individual retirement account (IRA), or possibly leave it in your former employer's plan. Check the options with
- Don't burn bridges. It's tempting to take out your frustration on your former employer, but this is a bad idea if you
need a reference for your next job. Stay professional throughout the process, even if others don't do the same.
Life Event: Special-needs dependents
When caring for someone with special needs, financial planning is a difficult necessity. But it doesn't have to be overwhelming. By
taking action today, you can positively impact the future of your family and loved ones in significant ways.
Everyone has financial needs, but if you're the parent or guardian of a child with special needs, some unique considerations need to be
made. It takes a team of experts—including a specialized attorney, a financial professional and a social service professional—to navigate
the complexities of special needs planning.
When planning for the financial future of a loved one with special needs, consider the following steps:
- Set goals
Develop a clear vision of how you want your dependent with special needs to live—and document your expectations in a letter of intent. What
kind of life do you envision for him or her? How will he or she live without you?
- Establish a special needs trust
A special needs trust will help to ensure your dependent receives the care you expect throughout his or her lifetime. A special-needs trust
allows you and other family members to leave assets such as money, life insurance proceeds or property to the trust, rather than directly
to the person with special needs. A trustee—whom you will name—will then have authority to use funds from the trust to help care for your
loved one with special needs. And as you establish the trust and name a trustee, make sure other members of the family are aware of the
trust and understand the role it will play to help secure the entire family's financial future.
- Estimate the financial need
Based on your goals, determine the cost of care for your dependent with special needs, keeping in mind that government programs or funding
received today may not be available in the future.
One of the most common methods of funding this type of long-term care is through life insurance. A special needs trust can be the recipient
of life insurance proceeds. Even more important, life insurance benefits can often be structured so that the funds can be used to provide
for your child while keeping the rest of your estate intact.
- Guardianships and conservatorships
A guardianship or conservatorship is a legal mechanism that grants a designated adult legal power to make decisions for another person who
is considered unable to make decisions on their own. When your child turns 18, they may need a guardian or conservator to manage certain
aspects of his or her life.
Parents who are financially planning for children with special needs have a distinct set of challenges. By approaching these challenges
proactively, it is possible to create solutions that can provide families with peace of mind.
Life Event: Changes in your marital status (death or divorce)
If you're on your own, whether through death or divorce, you need to carefully re-examine your entire
financial situation, including your life insurance needs. You almost have to start from scratch because going from two spouses to one in a
household will affect many financial decisions.
The first thing to determine is whether you still have a need for life insurance coverage. Remember, one
of the main reasons you purchased life insurance was to provide financial security for your immediate family. You many no longer need
coverage if your spouse has died and you have no children, or if your children are grown and financially independent.
But what if your spouse has died and you now have to raise young children on your own? Then instead of
dropping your life insurance, you might need to increase your coverage. As a single parent, you're the primary caregiver, breadwinner, go-
to person and so much more. Your children are probably entirely dependent on you. By having adequate life insurance coverage, you can help
ensure that your children will have the opportunities you've always dreamed they'd have.
If you're divorced and have young children, things could be more complicated. Your ex-spouse may be the
one to care for your children if you die while they're still minors. This is an important and complex decision, and it may require the
assistance of not just an insurance professional, but an attorney and an accountant as well.
Life Event: Coping financially with divorce
Divorce is the last thing on a newlywed's mind. Unfortunately, the fairytale sometimes doesn't work out.
If you're headed for a divorce, where do you begin?
Divorce can be a long process that strains your finances and robs your sense of control. With the right preparation and planning,
however, you can take charge of your future and save yourself time and money.
Divorce is stressful, and it's important to be proactive and in control throughout the process. Here are a few steps you can take to make
your way through the process and to help prepare yourself for a post-divorce financial future:
- Hire an attorney. There's no legal requirement that you hire an attorney. It might make sense to go it alone if you're
young, haven't been married long, are childless, and have few assets. However, people going through divorce should hire an attorney to
protect their interests, even though it might be expensive. Divorce attorneys usually charge hourly rates and may require you to submit a
lump sum up front. The rate will depend on the complexity of your divorce, the attorney's experience and reputation, and your geographic
- Gather information. To save time and money, gather as much of the following information as you can before meeting with
- Each spouse's date of birth and Social Security number
- Names and birthdates of children, if any
- Date and place of marriage and length of time living in present state
- Prenuptial agreement, if any
- Information about prior marriages, children, etc.
- Date of separation and grounds for divorce
- Current occupation, income and employer for each spouse
- Details of retirement plans for each spouse
- Joint assets of the parties
- Liabilities and debts of each spouse
- Life (and other) insurance of each spouse
- Separate or personal assets of each spouse
- Financial records
- Family business records
- Collections, artwork, and antiques
- Think about the big questions like child custody and alimony. Although your lawyer will help you work through the big
issues, you might want to think about these questions first:
- If you have children, what are your wishes regarding custody, visitation, and child support?
Whose health insurance plan will cover the children?
- Do you earn enough to support yourself, or should alimony be considered?
Which assets do you really want, and which are you willing to let your spouse keep?
- Do you feel strongly about living in the family home, or should it be sold or allotted to your spouse?
- Will you have enough money to pay the outstanding debt on whatever assets you keep?
- Split your joint accounts. If you have joint checking or savings accounts, freeze them if you can. Open your own
account and change your direct deposit. If you are on good terms with your ex, you can split the money in your shared accounts and open
- Change your passwords and wipe your computer. If you're in a contentious situation, wipe your computer (or pay someone
to wipe it for you) and change every password you've ever used. Protect your privacy. If things get ugly, you'll be glad you did.
- Prepare a budget and financial plan that will get you through the divorce and the following few years. The standard of
living of both spouses usually drops in the first few years after divorce because the same combined income and assets now has to support
two households instead of one. Most people don't prepare themselves financially or emotionally for this.
What can you do to prepare? Develop a budget that keeps your expenses within your post-divorce income. Consider all sources of income,
including spousal and child support. Use a worksheet so you don't overlook any expenses. Lastly, don't be afraid to ask a friend or family
member to review your budget and challenge the expenses that seem unreasonable.
Divorce is often messy, prolonged and expensive. Getting through the process can be financially draining, but remember that the light at
the end of the tunnel can lead to a new sense of financial independence.
Life Event: Supporting aging parents
Your parents made lots of sacrifices for you when you were growing up. They did all they could to
provide for your basic needs and then some. And they probably did so without ever thinking that they'd need to rely on your support later
in life. But that's not always how things work out.
Today, many people find themselves supporting their aging parents financially and otherwise. If you're
one of them, you need to think about what would happen to them if something happened to you. Would your parents be able to afford quality
health care and a decent place to live? Would they have to turn to friends or other family members for financial support?
By including your parents' financial needs in your insurance plans, you can take the guesswork out of
what would happen to your parents if you weren't there to help them.
Life Event: Planning for retirement (premature death or disability)
Mention “retirement planning” and most people think about 401(k)s, IRAs or mutual funds. They think that
if you keep saving and invest those savings wisely, you're all set for retirement when you reach age 65.
Maybe. But what if things don't work out the way you planned? What if you die prematurely or become
disabled? What will happen to those who will depend on your retirement savings to help support them into old age? A retirement plan without
insurance is just a savings and investment program that dies or becomes disabled when you do.
There are a number of ways life insurance can help you meet your retirement planning goals:
- Prevent your retirement plans from dying if you do – If you die before you retire, your
survivors will miss out on both your salary and the money you're setting aside for the future. If you have sufficient life insurance, it
can help pay your family's expenses and may still be there for your spouse's retirement.
- Supplement your retirement income – Your circumstances might change and you may no
longer have anyone who would need the proceeds of a death benefit. With a permanent life insurance policy, you can surrender it and
supplement your retirement income with funds from the policy's cash value.
- Preserve your estate for your survivors – If you've accumulated a large estate, life
insurance can help cover any estate taxes. If your estate is more modest, life insurance can help provide a legacy for your children and
Life Event: Enjoying retirement
Retirement is a major life event you're probably eagerly anticipating, and one for which you have
carefully prepared. Today's retirees have a different outlook on retirement than previous generations. Retirees today have a longer life
expectancy, are staying active and independent longer, and are expecting to live life to the fullest. They are also better informed and
An important aspect of preparing for retirement is learning about the options you have with your retirement savings, government
programs, and other benefits you might be eligible for, including pensions and other employer programs.
Can you comfortably answer these six questions about retirement?
- What income can I count on receiving from my investments?
- What are my fixed and variable expenses each month?
- When will my retirement income, including pensions or other benefits start?
- What government benefits am I eligible for and how much will I receive?
- Are any of my government benefits limited or income-tested?
- What health benefits are available to me now that I'm retired?
If so, you've likely already taken many of the necessary steps to prepare for a financially secure and rewarding retirement.
If you still have some uncertainty, remember that it's never too late to address your issues and concerns – even in retirement. Here are
some essential money-management tips to help you enjoy your retirement years:
- Develop a smart distribution strategy
If you have an IRA or a 401(k), it's important to develop a strategy for taking distributions. They will be taxed as income, and you'll
have to start making required minimum distributions when you reach age 70.5, or else you'll face harsh tax penalties.
For many retirees, selling their current home and moving to a smaller one can be a great way to cut down on costs. A larger house means
higher insurance premiums, higher taxes, and higher maintenance and cleaning costs.
- Earn more cash
Even after you start living off of your savings, you might feel the need for more cash to pay your bills or to cover the cost of as
travel, eating out and entertainment. Consider getting a part-time job or taking on some freelance work.
- Enjoy low-cost activities
If you're on a budget, you can still enjoy many activities without spending much. Consider exploring low-cost or free things to do in your
area. Check the Internet, local newspapers or your library for ideas.
- Take advantage of senior discounts
Getting older has its advantages, including the senior discounts available on everything from food to hotel accommodations to
entertainment. Do some research online and ask at the businesses you frequent to find out what discounts are available.
- Review your bills
It's a good idea to look at your bills to check for recurring payments on services you may not really need.
Life Event: End-of-life concerns
Even though it may be unpleasant, preparing for the end of your life is important to your overall financial health. You can't afford to
put off making decisions about how you want your finances to be handled after you're gone. If you haven't thought about end-of-life
planning, here are some steps you may want to take to ensure that your family is protected.
- Make a will
A last will and testament is the most basic document you'll want to include in your estate plan. It gives you the opportunity to
specify how you want your assets distributed after your death. If you die without a will, you're considered intestate and it's left up to
the probate court to divide up your property according to state laws.
You can also use a will to name a guardian for minor children or appoint an executor of your state. If you don't have a will, the
probate court will assume these responsibilities.
The process for making a will varies from state to state. Even if you have a small estate, drafting a will is a smart move if you're
concerned about what will happen to your property after your death.
- Consider a living trust
A will alone can only do so much. In some cases, you may need a living trust. A trust takes effect while
you're still alive, and you can use it to manage your estate both before and after your death. Examples of the types of assets you can put
in a trust include real estate, stocks, bonds, antiques, jewelry and bank accounts.
There are a number of reasons why you may want to set up a trust. If you plan to leave part of your estate to charity, you can set up
charitable remainder trust to manage those assets. A special needs trust allows you to set aside assets to care for someone with a mental
or physical disability. If you have young children, you can set up a trust for their benefit with instructions on how and when they're able
to access the money.
Setting up a trust may yield some tax savings for your beneficiaries, and any assets that you transfer into it are exempt from the
probate process. There are costs associated with establishing and maintaining a trust, so speak with a qualified estate planning attorney
to make sure it's the right fit.
- Review your beneficiaries
Naming a beneficiary for certain accounts can ensure that your assets go to the right person after your death. If you have life insurance
policies, annuities, college savings accounts, 401(k)s, IRAs, brokerage accounts or certificates of deposit, be sure to double-check who is
listed as your beneficiary. If you have an account with a named beneficiary, you can't use a will or trust to leave the assets to someone
If you have joint bank accounts with your spouse, check with the bank to see if the accounts allow right of survivorship. This means that
if one of you dies, the money in the account passes directly to the other spouse without having to go through probate. In some states,
right of survivorship is automatic, but in others you may have to request a specific notation on the account.
- Look at your insurance coverage
Life insurance is designed to replace lost income if something should happen to you or your spouse. If you bought
life insurance several years ago, you may want to review your policy to make sure you have enough coverage. How much life insurance you
need depends on your income, your spouse's income, your assets and your liabilities.
In addition to life insurance, you may want to consider long-term disability insurance and long-term care insurance. Long-term disability
coverage replaces lost income if you or your spouse is unable to work because of a disability. Long-term care insurance covers medical care
if you or your spouse develops a serious chronic health condition.
Planning for end-of-life situations is not pleasant, but it's essential to protecting your finances and your peace of mind. The more
prepared you are now, the better off you'll be when the inevitable occurs.
Life Event: Dealing financially with an early death
One of life's most difficult challenges is coping with the death of a spouse or other loved one. The
impact of your loss is not only emotional, but also social and financial. Unfortunately, the emotional toll makes it harder to deal with
the other challenges.
In this difficult time, keep the following in mind when dealing with financial and estate issues:
- Don't make quick decisions. Some decisions, such as funeral arrangements, are urgent. Other ones can wait,
particularly things that can't be easily changed after they're done, such as changes in your job or lifestyle. It's much more important to
make those decisions correctly rather than quickly.
If you know a qualified person who you trust, ask their advice. A family member, friend, attorney, financial planner, accountant or a
combination of these can help you make decisions more objectively than you might be able to do yourself following a loss.
- Gather important documents such as wills, trusts, death certificates, insurance policies, Social Security numbers,
military discharge papers, and information about employee benefits such as life insurance.
- Contact insurance companies to collect life insurance and other benefits. You should receive benefits relatively soon
and this will help with short-term income needs.
- Contact Social Security. You may be able to collect survivor benefits as early as age 60. Before you begin collecting,
however, you should discuss this with a professional with knowledge about the Social Security system to be sure that you choose the best
strategy to collect benefits. Sometimes it's better to delay Social Security to receive increased benefits later on. Keep in mind that if
you and your spouse were both already collecting Social Security, you will lose the benefits of the spouse with the lower benefit.
- If your spouse was collecting a pension or annuity, notify the appropriate company so that future payments are paid to
- Notify other relevant financial entities. This includes banks, investment firms, motor vehicle licensing, credit
cards, and utility companies.
- Get multiple copies of the death certificate. You will need one to close every account held in your spouse's name.
- Take an inventory. Settling an estate can be complicated, depending on family structure, relationships and whether
your spouse conveyed their wishes clearly. Walk through your house and take note of valuables following your spouse's death.
- Consult an estate planning attorney. They will help you settle the estate, navigate the probate process, and make sure
that the title of everything that should be in your name is changed. It can take six to 12 months to settle an uncomplicated estate, and up
to two years if things are more complex.
- Review your short-term cash flow needs as well your cash needs for the next year. Include life insurance proceeds,
health insurance needs and liquid funds you may need during the next year.
- Review your investment portfolio to make sure it's appropriate to your new financial circumstances. This could mean
changing a portfolio that was appropriate when your spouse was alive to one that works for you and your financial goals.
While these steps may address the most important financial aspects of a loss, they do not address the emotional or social aspects of
your loss. But by taking the necessary steps to get your finances in order, you can worry less and be more able to address other important
aspects of your life.
Voluntary insurance at the workplace
Voluntary insurance is an optional benefit offered by some employers where the employee pays the premium. The premiums, based on the employee's age and the amount of insurance purchased, may be less expensive than individual insurance premiums because of an employee group discount.
In recent years, Americans have been turning to voluntary benefits to fill the gaps in their coverage needs. A variety of voluntary benefits are offered. Employees can choose to purchase only those benefits they need. The premium for these voluntary benefits is paid for by the employee, with no direct costs incurred by employer. Because they are offered through the workplace, premiums are usually paid through convenient payroll deduction.
Some voluntary life insurance plans offer additional benefits such as coverage portability if the policyholder changes jobs, accelerated benefits if the policyholder becomes terminally ill, and the option to purchase life insurance for spouses, domestic partners and dependents.
Voluntary insurance can be a good idea for many people because if they enroll soon after becoming employed, they often will not have to provide evidence of good health to be insured up to the guaranteed issue amount. This way, people who might not be eligible for life insurance otherwise can obtain coverage.
Here are a just a few positive benefits of obtaining voluntary insurance at your workplace:
- Voluntary insurance can help provide employees with financial safety nets that keep their minds on their jobs and not on money concerns.
- Voluntary insurance pays cash benefits that can be used to pay unexpected health care costs that might not be covered by medical insurance.
- Voluntary insurance pays cash benefits regardless of any other insurance coverage employees may already have, including insurance available through government exchanges.
What are the different types of insurance?
Consult an Insurance Professional
Comments contained in this website reflect our understanding of current tax law. However, the laws are subject to different interpretations and changes. Our agents do not provide tax advice. Please consult with your tax advisor about your personal situation.