Life insurance (and even annuities) serves as the "fail-safe" that provides the funding needed to carry out a family’s financial plan in the event of an unexpected death. Without this fundamental pillar of protection, any financial plan is at best a "cross your fingers and hope" wish list.
Simply put, life insurance is like an American Express card — you should never leave home without it.
It is generally accepted that there are five types of people who need life insurance the most:
• Individuals with financial dependents
• Individuals who have entered into joint financial obligations with others
• Individuals who have financial plans in place for the benefit of others
• Individuals who have a predisposition to adverse health conditions (due to heredity or genetics)
• Individuals with dangerous jobs
Individuals with financial dependents
The first category of people who absolutely need life insurance is those with dependents of any kind. This includes married couples where one spouse is the breadwinner, a single parent or a two-worker household where the loss of one breadwinner would cause a significant financial burden and lack of resources.
Another prominent, but less recognized group of people in this category is homemakers, as their untimely death can create unforeseen costs for childcare.
Other candidates could be married or single family members who support elderly parents or other loved ones.
Lastly, candidates could include benefactors who consistently and significantly support causes and organizations that are dear to them.
Individuals with joint financial obligations
Joint debts entered into by spouses are a prime example here. If you and your partner own a home together, life insurance will cover your housing costs in the event of your partner's untimely death.
Individuals in this category can also include unmarried couples who jointly enter into leases, car financing arrangements and even mortgages on a home or income-generating rental property. This same type of arrangement can also exist between a parent and a child, siblings or close friends.
You should also get life insurance if you've co-signed for some other types of debt, like a student loan or consumer credit debt, to protect your co-signer from having to foot the whole bill.
Lastly, business loans personally guaranteed by an individual or among business partners can create joint liabilities. Often known as “key man” insurance, it allows the payoff of a business loan, or the buyout of a partner’s share of the business.
Individuals who have financial plans for the benefit of others
This is where the concept of life insurance being utilized to "complete the plan" comes into play.
Many parents want to engage in some sort of college planning for their children. They should consider things such as the types of schools, the funds available for college saving, the investment vehicles available to execute the strategy (i.e. 529 Plans, after-tax investments, etc.) and the timeline for investment.
Life insurance is a tool to ensure that there's adequate coverage in place to fund the plan. If one or both parents die next week, life insurance means there will be funds forthcoming to ensure that college is paid for — or, in other words, the plan is completed.
The same deal would be contemplated with respect to retirement planning between spouses. The point is that if you have a financial plan that is for the benefit of someone other than yourself, having adequate insurance to fulfill your contributions to that goal is prudent to ensure that the plan is executed in the event of your untimely death.
Individuals who have an adverse genetic predisposition
Our agents are taught to perform a field underwriting function when completing life applications with clients. There is a requirement to make inquiries about the general health profile of not only the prospective insured, but his/her immediate family within one degree (i.e. children, siblings and parents).
If illnesses, such as certain cancers (e.g. breast, ovarian, prostate) or medical conditions (hypertension, high cholesterol or diabetes) come to light, they should initiate a discussion about life insurance not only to address need, but also for the purposes of securing the client's "insurability" or ability to get and keep affordable insurance while they are healthy or haven't manifested any potential symptoms that may be indicative of such illnesses or conditions being inherited.
Our Insurance Protection Rider allows clients to add additional insurance protection up to six times in their lives (between the ages of 25 and 40) without proving medical insurability, no matter what the current medical status may be.
Individuals who have an inherently risky occupation
Way too often we find that police officers, firefighters, corrections officers and emergency responders are sorely underinsured. They perform extremely dangerous jobs where the prospect of not coming home at the end of a shift is very real. Many rely only on the minimum group term coverage offered by the governing body for which they work. Having adequate coverage brings more peace of mind to not only the client as he or she walks out the door, but their family as well. Hermann Sons Life, with its local community facing values, could be a perfect choice for our public safety professionals.
Call the Home Office and we can put you in touch with an agent who can discuss your options and help you find the life insurance plan that best suits your needs – no matter which category you are in.