Life Insurance and needs (continue)
The most important family needs include the following:
Final expenses - Expenses before death, including health care and funeral expenses. 
- Doctor and hospital bills from a final illness.
- Funeral expenses.
- Probate and estate settlement costs.
- Estate taxes.
- Federal and state taxes for large estates.
- Mortgage.
- Loans, credit cards, and other debts.
- Bequests to individuals or charitable organizations.
Readjustment income - An amount provided to survivors to allow a transition from the current income level to a reduced income level.
- Cash for emergencies.
- Preventing a reduction in the family's standard of living, due to insufficient income.
- Childcare expenses for young dependent children.
Dependency income needs - Income required while children are dependent.
- Continuing family income.
- Funding children's education.
- Retirement income for a spouse.
Pure Protection
All life insurance contracts include the pure protection against the risk of a premature death. It is the loss of life that triggers payment of the benefit. The death benefit is the primary purpose for buying life insurance.
Life insurance may be used to fulfill a number of personal and family needs. With life insurance, the death of the insured creates an immediate estate for the benefit of the insured's family. Request a FREE Life Insurance Quote
Premature Death
Premature death can be defined as the death of a working person with outstanding or unfulfilled financial obligations, such as family members to support, children to educate, and a mortgage to pay off. The costs of premature death include the loss of income to the family, additional family expenses, possible decline in the family's standard of living, and noneconomic costs, such as grief and the loss of a role model for the children.
The ownership of life insurance is economically justified on a family member who earns an income that others are dependent on for part or all of their financial support. The financial impact of premature death is not uniform for all families and varies depending on the family structure.
If a single person with no dependents dies or a spouse in a two-income family with no children dies, that death is not likely to cause a serious financial problem for others. In contrast, premature death can cause great financial insecurity in a single-parent family, in a family with children in which both spouses work, and in a traditional, blended, or sandwiched family. The needs can be used to estimate the amount of life insurance these families need.
When premature death occurs, the family's share of the deceased person's future earnings is lost forever. If replacement income from other sources is insufficient to meet the family's needs, or if present savings and financial assets are limited, the surviving family members might experience considerable financial hardship. Request a FREE Life Insurance Quote
