Why Women Need Life Insurance
Today, women have more financial
responsibilities than ever before. How will your family or loved ones manage
financially if you die? Whether you are single, married, employed, or a
stay-at-home mom, you probably need life insurance. At the very least, life
insurance can help pay for the costs of funeral and burial services, estate
administration, outstanding debts, estate taxes, and the uninsured expenses of
a final illness.
Who needs life insurance?
Working women
Increasingly, families depend on the income
of two working parents. If you're a working mother, your income can have a
significant impact on the quality of your family's lifestyle. Your income helps
cover the cost of ordinary living expenses such as food, clothing, and
utilities, and it provides savings for your children's college education, and
for your retirement. Life insurance protects your family by providing proceeds
that can be used to replace your lost income if you die prematurely.
Single women
Often, women, like men, think that it's not
necessary to buy life insurance because they have no dependents. What's often
overlooked is that life insurance can provide necessary funds to pay off car
loans, education loans, debts, a mortgage, taxes, and funeral expenses that
might otherwise be the responsibility of family members. Also, the cash value
of permanent life insurance may be used to supplement retirement income.
Single moms
Whether you're divorced, widowed, or simply a
single mom, you're most likely primarily responsible for your child's support.
If you die prematurely, life insurance can provide ongoing income to cover
child-care costs, medical expenses, debts, and future college costs.
Stay-at-home
moms
Maintaining a household is a full-time job,
and you have many important roles and duties. The cost of the services
performed by a stay-at-home mom could be quite significant if someone had to be
hired to do them. If you die, your surviving spouse may have to pay for
services such as child care, transportation for your children, and
housekeeping. Taking over these added responsibilities could cause your spouse
to shorten work hours, resulting in a reduction in income. Proceeds from your
life insurance can help your spouse pay for services that keep the household
running and allow your spouse to keep working.
Family
caregiver
Many women find themselves providing care for
both children and elderly family members. Caring for an aging parent or family
member can include paying for the costs of adult day care, uninsured medical
expenses, and extra transportation. Adding these expenses to the costs of
maintaining a household, child care, and college tuition can be financially
overwhelming. Unfortunately, these added financial responsibilities often
continue after your death. Life insurance provides a source of funds that can
be used to help pay for these expenses.
Business
owner
You may be one of the increasing number of
women business owners. If you die while owning your business, life insurance
can be used to provide cash for company expenses such as payroll or operating
costs while your estate is being settled. Also, life insurance can be a useful
tool for business owners structuring buy-sell arrangements or providing
benefits to key employees.
Life insurance types and options
Life insurance comes in many different sizes
and shapes, and determining the policy that meets your needs may depend on a
number of factors. Understanding the basic types of life insurance can help you
find the policy that's best for you.
Term life
insurance
Term life insurance provides a simple death
benefit for a specified period of time. If you die during the coverage period,
the beneficiary you name in the policy receives the death benefit. If you live
past the term period, your coverage ends, and you get nothing back. The cost,
or premium, for the coverage can be fixed for the duration of the policy term
(usually 1 to 30 years) or it can be "annually renewable" meaning
that the premium can increase each year as you get older. However, the premium
for term insurance usually costs less than the premium for permanent insurance
when all factors are the same, including the death benefit.
Whole life
insurance
Whole life is permanent or cash value
insurance that provides insurance coverage for your entire life. With most
whole life policies, part of your premium is added to the cash value account,
which earns interest. Some whole life policies also pay a dividend, which
represents a portion of the company's profits made during the prior year.
The cash value grows tax deferred and can
either be used as collateral to borrow from the insurance company or be
directly accessed through a partial or complete surrender of the policy. It is
important to note, however, that a policy loan or partial surrender will reduce
the policy's death benefit, and a complete surrender will terminate coverage
altogether.
Note: Guarantees are subject to the claims-paying
ability of the issuing insurance company.
Universal
life insurance
Universal life is another type of permanent
life insurance with a death benefit and a cash value account. A universal life
insurance policy will generally provide very broad premium guidelines (i.e.,
minimum and maximum premium payments), but within these guidelines you can
choose how much and when you pay premiums. You are also free to change the
policy's death benefit directly (again, within the limits set out by the
policy) as your financial circumstances change. But if you want to raise the
amount of coverage, you'll need to go through the insurability process again,
probably including a new medical exam, and your premiums will increase.
Variable life
insurance
Variable life insurance is a type of cash
value coverage that allows you to choose how your cash value account is
invested. A variable life policy generally contains several investment options,
or subaccounts, that are professionally managed to pursue a stated investment
objective. Choices can range from a fixed interest subaccount to an
international growth subaccount. Variable life insurance policies require a
fixed annual premium for the life of the policy and may provide a minimum
guaranteed death benefit. If the cash value exceeds a certain amount, the death
benefit will increase.
Variable
universal life insurance
Variable universal life combines all of the
options and flexibility of universal life with the investment choices of a
variable policy. You decide how often and how much your premium payments are to
be, within policy guidelines. With most variable universal life policies, you
get no guaranteed minimum cash value or death benefit, but you can direct how
your premium payments are invested among policy subaccounts.
Note: Variable life and variable universal life
insurance policies are offered by prospectus, which you can obtain from your
financial professional or the insurance company. The prospectus contains
detailed information about investment objectives, risks, charges, and expenses.
You should read the prospectus and consider this information carefully before
purchasing a variable life or variable universal life insurance policy.
Joint and
survivor life insurance
You and your spouse may choose to buy a
single policy of permanent insurance that covers both of your lives. With
first-to-die, the death benefit is paid at the death of the spouse who dies
first. With second-to-die, no death benefit is paid until both spouses are
deceased. Second-to-die policies are commonly used in estate planning to pay
estate taxes and other expenses due at the death of the second spouse. Other
than the fact that two people are insured by one policy, the policy
characteristics remain the same.
Bottom line
Life insurance protection for women is
equally as important as it is for men. However, women's life insurance coverage
is often inadequate. It may be time to consult an insurance professional who
can help you assess your life insurance needs, and offer information about the
various types of policies available.
CornerStone Financial
Whether your
nest-egg is worth millions or thousands,
You and your
family deserve it more than the government....
We are here to help you with all of your
financial and insurance needs. Our skilled professionals are licensed with
over 100 top name companies and can help you gain a better understanding of the
concepts behind insurance including investing, retirement and estate
planning. There are literally thousands of products to choose from,
but we can help pinpoint what is best for you and your situation. Please
do not hesitate to contact us if you have questions.
Contact:
Eric Tuttobene
President/CEO
CornerStone
Financial
(615) 427-8780
IMPORTANT DISCLOSURES
The
information presented here is not specific to any individual's personal
circumstances.
To the extent
that this material concerns tax matters, it is not intended or written to be
used, and cannot be used, by a taxpayer for the purpose of avoiding penalties
that may be imposed by law. Each taxpayer should seek independent advice from a
tax professional based on his or her individual circumstances.
These
materials are provided for general information and educational purposes based
upon publicly available information from sources believed to be reliable—we
cannot assure the accuracy or completeness of these materials. The information
in these materials may change at any time and without notice.
