_1_ Premature Death Loss Exposures
Life Insurance can be used to provide for what costs? (6)
*Lost Income* - deceased wage earner's income *Final Costs* - funeral costs, medical expenses, etc *Outstanding Debts* - credit card debt, mortgage, etc *Unpaid Long-term Obligations* - supplement retirement savings, fund college tuition, child care expenses, home maintenance expenses *Estate Planning Costs* - estate taxes, probate costs, lost charitable contributions *Unfulfilled Family Obligations* - both economic (adverse impact to standard of living) and non-economic (child grieving over lost parent)
Traditional Family
One parent is employed, while the other manages the household and takes care of dependent children if working spouse dies, loss of earnings can severely impact the family's standard of living life insurance plus social security benefits may mitigate this cost greatly if stay at home spouse dies, childcare costs increase dramatically and can adversely impact the family's standard of living
what is the age cut-off for premature death?
any death that occurs before age 65
Sandwiched Families
baby boomers who are now middle aged and supporting both younger and older family members financial impact in this case can be extensive
impacts of premature death loss exposure
can affect ability of potential survivors to... make mortgage payments provide for children's education meet daily living expenses generate retirement income meet tax obligations designate financial gifts to others
Two-Income Families with Children
includes married or unmarried couples who care for dependent children the loss of one spouse's earning can significantly affect the surviving spouses ability to properly maintain the household, provide for related expenses, fund future retirement, ensure financial well-being of children life insurance enables the family to maintain its "two-income" standard of living
Single Parent Families
includes single parents, single grandparents caring for a child, or other relatives or guardians who fulfill parental responsibilities related to a dependent child / children need life insurance to fulfill responsibilities including: generate income, manage the household, provide emotional support use life insurance as a tool to ensure loved ones will be cared for properly
Single Without Children Why do these people need life insurance?
individuals who are not married or in a long term relationship, committed relationship, and have no dependent children according to IRS this makes up > 2/3 of today's middle income tax payers need life insurance to cover funeral expenses and uninsured medical expenses (may also want to consider providing support for elderly parents, dependent siblings, or other family members)
Blended family
one or both partners bring with them dependent children from a prior relationship can be like traditional or two income with children unique to blended families...children may be older and reaching the point where the education and supporting cost escalate
Two-Income Families without Children
populated with couples who don't have children or who no longer have dependent children may not be as severely impacted by the premature death of one wage earner
What types of families can benefit from having life insurance?
singles w/o children single-parent families two-income families traditional families blended families sandwiched families
examples of unfulfilled financial and emotional obligations associated with premature death
unpaid mortgage college tuition support for young children
