Financial foundation begins with life insurance

            In the ever-changing world of financial products and services, life insurance is sometimes viewed as a product out-of-step with the times.

            In the arena of modern financial products, life insurance is perceived to be about as stylish as a Nixon/Agnew bumper sticker. Still, stylish or not, life insurance is, most financial experts agree, the foundation on which people should build their financial goals. 

            The primary benefit of life insurance is to provide for one's loved ones, helping them meet daily expenses and continue the activities of daily life without major disruption. Life insurance can be used by families to pay bills—like credit card and mortgage debt—and supply the necessities of life. Without adequate life insurance coverage, many families would be placed under great financial distress to meet their ongoing financial obligations. 

            Life insurance can also protect one's spouse against sharp reductions in future pension and Social Security payments by replacing assets cut short by premature death. For example, it is not unusual for a surviving spouse to receive less than half of his or her spouse's projected pension because death has interrupted anticipated contributions flowing into the plan. 

            Life insurance can help business owners and others with significant assets to pass those assets to their loved ones in a tax-efficient manner. It also serves as a tremendous tool enabling people to support nonprofit organizations through charitable gifts.

            Still, many individuals just don't pay attention to their life insurance needs, despite the many changes that they may experience in their lives. A survey by MetLife (August 2004) found that three in five working Americans are highly concerned about their families' financial well-being in the event of their or their spouse's death. The survey also revealed that nearly half of working Americans (45 percent) haven't taken any steps to determine their household's life insurance needs. In short, people are worried and “driving blind” when it comes to their life insurance protection.

            The moral of this story is simple: People need to carefully consider their life insurance needs. Most likely, they'll find that life insurance coverage is the key to their long-term financial goals. 

            Life insurance may not be as exciting as a “can't miss” stock tip, but the security it offers brings a peace of mind that most people can't afford to live without.

Courtesy of Mark Howlett Thrivent Financial

10/03/2008