William Penn Life, 2013 (48. évfolyam, 1-12. szám)
2013-11-01 / 11. szám
Moneywise with Jeff DeSantes SOME PEOPLE EQUATE life insurance with death and misfortune. In reality, life insurance is for those who are living. Without it, or without the proper coverage, you could leave your family without the resources necessary to maintain their standard of living. That being said, I would like to review why life insurance is the foundation for sound financial planning. First, it can be a cost-effective way to provide for your loved ones; and secondly, life insurance can be an important instrument in the following ways: • Income replacement. If you have dependents, you have to consider what would happen to their lifestyle if they could not rely on your income. Life insurance can also help supplement retirement income for a surviving spouse. • Debt paying. Without life insurance, loved ones will be left to pay for burial costs, credit card debt, medical expenses and any other debts (e.g., mortgages). • Estate Planning. With life insurance, loved ones can pay off estate taxes so that heirs are not held responsible for these specific estate taxes. So, how do you determine how much life insurance is enough for your needs? Here are three steps you should take: Do you have enough life insurance? Step I: Determine your family's short-term needs. Short-term financial needs are obligations such as loan balances, credit balances (credit cards) and mortgages, including home equity loans and lines of credit. You also want to add to these other short-term expenses such as funeral expenses, final medical costs, estate taxes and estate settlement cost. Step 2: Determine long-term needs. Long-term needs must be reviewed and calculated in order to provide some level of monthly income. This level of income will be used to maintain your family's standard of living. When calculating these figures, make sure that you take into consideration inflation. You must analyze today's dollar versus tomorrow's dollar. Step 3: Calculate your available cash resources. Through this process, you will determine your monthly cash needs based on your available cash from investments, savings accounts, pensions, retirement accounts and Social Security. The total value from your cash resources will help you determine your shortfall. Based on these simple exercises, you will be able to determine if you have enough life insurance. Keep in mind that most American families do not carry enough life insurance. In the early 1980's, about 70 percent of American adults owned life insurance; today, only about 60 percent do, and that figure continues to decline. It all comes down to one simple question: can you afford not to own life insurance? □ If you do not have a WPA agent, please call the Home Office at 1-800-848-7366, ext. 120, and we can assist you in finding an agent who will serve you and your family by offering: • A Review of Your Needs • Life Insurance Protection • Tax-Deferred Annuities • * Juvenile Insurance Plans • Special Fraternal Benefits • 4 ° November 2013 0 William Penn Life
