Life Insurance Awareness Month

September is here, and that means it’s Life Insurance Awareness Month. Most people understand and value the benefits of life insurance: In the case of a tragedy, the death benefit proceeds can provide financial peace of mind and freedom. There are many reasons to purchase life insurance, including but not limited to replacing income, paying off debt, educational expenses for children and covering funeral services. The general rule of thumb is to have five to 10 times your income in death benefit coverage. If you are married and have young kids, I would say you would need closer to 10 times your income, given the multiple levels of need. Even in retirement, you may have a need for death benefits. For example, if you are presented survivorship options for your pension, you may be better off selecting a single life pay — or some percentage less than 100% to your spouse — and purchasing life insurance to cover the surviving spouse instead of selecting 100% of your pension also be paid to your surviving spouse.

Life insurance has changed immensely in the past decade or so and can be much more than just a death benefit to your family. For instance, I purchased a permanent life insurance policy on myself to protect my family in the case of my death. However, the cash value that builds up in the policy can be used to supplement my social security in the way of tax-free withdraws down the road in retirement. Another area that has changed in the past several years is the ability to use the death benefit, not the cash value, to help pay long-term care expenses. This leverage can be very advantageous versus paying for those expenses on your own.

Like many aspects of your financial life, things change, and so should your strategy. Life insurance is no different; make sure you have the right policy at the right price. Happy Life Insurance Awareness Month!