Uses of life insurance and Families
Single-Parent Families
The number of single-parent families with children under age eighteen has increased 
substantially in recent years. This increase is primarily due to the large numbers of children born outside of marriage, widespread divorce and separation, and the incarceration or death of a parent. In most cases, single-parent families are headed by women.
Premature death of an income earner in a single-parent family can result in financial devastation for the surviving dependent children despite the possibility of receiving Social Security survivor benefits. Thus, the need for life insurance is great. Since death means no one remains to raise the children, single parents need to provide money for someone else to raise the children in their place. And they need to provide money to pay off debts and last expenses. Unfortunately, many single-parent families have low incomes, and their ability to purchase large amounts of life insurance is limited. Request a FREE Life Insurance Quote
Two-Income Families
In many families today, both spouses work. The proportion of women in the labor force has increased dramatically over time, especially married women with children.
Marriages in which both husband and wife work outside the home are the fastest growing segment of the population. The reasons for two-income families range from the desire for a career, or the wish to sustain a higher standard of living, or perhaps a major purchase such as a home. In the case of married couples with children, the extra cost of raising a family, including the cost of education, is reason enough for two incomes.
In two-income families with children, premature death of either spouse can cause financial insecurity for the surviving family members because both incomes are usually needed to maintain the family's customary standard of living. The need for life insurance on both spouses is great to replace the lost earnings, so the family can maintain its previous standard of living.
In the case of a married working couple without children, premature death of one spouse might not create severe financial problems for the surviving spouse. The surviving spouse is already in the labor force, childcare costs, and the cost of a college education for children is not a factor. However, other concerns, such as indebtedness and current or future financial support of parents or other relatives, might prompt the need for life insurance.
Traditional Families
"Traditional families" are those in which only one parent (traditionally the father) is in the labor force, and the other parent (traditionally the mother) stays at home and takes care of the dependent children, and possibly dependent elders as well. Traditional families have declined in relative number over the last few decades. Premature death of the parent in the labor force can cause great financial loss for a traditional family. The need for life insurance for breadwinners is well established. Although the surviving family members might be eligible for Social Security survivor benefits, the benefits will probably be inadequate to meet the family's needs. If the amount of life insurance on the deceased parent is insufficient, the family's standard of living is likely to decline.
What most people don't realize is that the need for life insurance on the spouse staying at home can be equally important. The death of this spouse can result in significant expenses, such as childcare and housekeeping. Although the life insurance amounts needed might not be as high as those for the working spouse, the lack of insurance can have a negative effect on the surviving family's standard of living.
Blended Families
A "blended family" is one in which a divorced person with children marries someone who also has children. Premature death of a working spouse in a blended family can cause great financial difficulty for the surviving family members, and the need for life insurance is great. Both spouses might be in the labor force, and two incomes are needed to support the blended family. The premature death of one spouse may result in a reduction in the family's standard of living. In addition to children present from the previous marriages, additional children may be born in the new marriage. As a result, childcare costs may be incurred over a longer period, and funds for the parents' retirement and children's college education may have to compete for limited funds. Financial planning regarding estate distribution may also be especially important for these families. Request a FREE Life Insurance Quote
Sandwiched Families
The increase in life expectancy over the last few decades has proportionately increased the number of older people in the total population. Often, an aged parent receives financial assistance or other assistance from a son or daughter. A "sandwiched family" is one in which a son or daughter with children provides financial support or other types of assistance, such as physical care, to one or both parents, leaving them "sandwiched" between the older and younger generations. Premature death of an income earner in a sandwiched family can cause enormous financial hardship to the surviving family members. Death of a caregiver can also be devastating and result in the need for thousands of dollars per year to pay for substitute care.
Juveniles
An obvious advantage of a juvenile policy is coverage to pay the child's last expenses in the event of premature death. For many parents, this is a hard sell since the death of a child is not something they wish to contemplate.
However, a life insurance policy on the life of a child can also protect insurability, and also offers a unique opportunity for cash value accumulation. Since the cost of insurance is lower in a child's early years, most of the premiums paid go into cash value which grows with interest. When a child reaches college age this accumulated cash value may be used to pay the cost of education. And eventually the cash value may be used to purchase a home or start a business. Parents may be more receptive to insuring children when these reasons are discussed. Request a FREE Life Insurance Quote
