Life Insurance - the middle class way of setting up an estate for your family.
Everybody wants to go to heaven, but no one wants to die. Have you heard that expression before? It’s one of my favorites because it’s so true. Though we typically don’t want to deal with it, the fact is we’ll all die. The bigger question is what are you doing financially to prepare for the inevitable? When you read the paper or watch the news, and some wealthy person dies and leaves his/her family an estate or trust fund to carry on after his/her death, we usually sigh and say, “. . . that must be nice.” The truth is middle income Americans like you and me can leave the same estate in the form of life insurance.
Life insurance creates an immediate estate, and there is no other legal method whereby an immediate estate can be created at such a small cost. Without getting too technical, life insurance is a contract between you and the insurance company that says in the event that you die, the insurance company is obligated to pay the person or persons you choose (beneficiaries) some predetermined amount of money (death benefit.) You pay an amount per month or annually (premium) for this coverage and should you die, your loved one receives the death benefit tax free.
My father, who I miss dearly, wanted to provide for us if he died unexpectedly so he took out a life insurance policy on himself. Unfortunately, he was under insured, and though we could afford to pay for his burial and some incidentals, we could not afford to hold on to the house in which I spent my childhood. For less than an additional $10 per month, we would have owned my childhood home, free and clear.
For as little as $50 per month, you could own a life insurance policy that would pay off your mortgage in the event of an untimely death. Depending on your heath and age, that amount could be considerably less. Maybe you want to make sure there are college funds for your children. Maybe you're an empty nester, and you don't want your spouse to be alone and struggle financially. If action speaks louder than words, the million dollar question is what are you doing to show your loved ones that you care about what happens to them when you’re gone?
If you paid off your home, CONGRATULATIONS! Guess what, your loved ones will still have to pay property taxes on the home long after you've left the planet
You say, "I'm in great health. I'll save my way to an estate." My father was diagnosed with kidney cancer though we have no history of cancer in our family. In addition, if you didn't know, according to the Bureau of Economic Analysis, the national savings rate is now less than -1.6%. Translation: we're spending more than we're earning. If you're like most of us, you're doing your best to pay your bills. Savings is on a wish list right now.