William Penn Life, 2012 (47. évfolyam, 1-12. szám)

2012-04-01 / 4. szám

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-your family could be left without the resources to maintain their standard of living.

With this being said, I would like to review why life insurance is the foundation for sound 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:

1. 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.

2. Debt Paying. Without life insurance, loved ones will be left to pay for burial cost, credit card debt, medical expenses and any other debts, such as a mortgage.

3. Estate Planning. With life insurance, loved ones can pay off estate taxes so that heirs are not held responsible for these specific estate taxes.

Determining How Much

Okay, so owning life insurance is important. But, how much life insurance do you really need? To determine that, you need to perform three basic steps:

Step 1: Determine your family's short-term needs. Short-term financial needs are obligations such as loan balances, credit balances (credit cards), mortgages, home equity loans and lines of credit. You also want to add to these expenses 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 utilized to maintain standard of living expenses. 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 short-fall.

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. Since the early 1980's, fewer American households have life insurance protection. Three decades ago, 70 percent of adult Americans owned life insurance; today, only about 60 percent have the protection life insurance provides.

If you do not have a WPA agent, please call the Home Office at I -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 • Taxed-Deferred Annuities •

• Juvenile Insurance Plans • Special Fraternal Benefits •

4 0 April 2012 ° William Penn Life