Making ₵ents: Life Insurance

Protect Your Family: Life Insurance Awareness Month
by Kate Rhoten

Making CentsWhile I was working in the financial services industry, I helped clients with their insurance and investment accounts. Insurance is an integral part of planning. The month of September is Life Insurance Awareness Month. Even though it was a focus with each client, September was a reminder to review policies, update beneficiaries and change policies (amount or company providing coverage) as necessary.

Life insurance is not a topic most people want to discuss. But the peace of mind it can provide when the unthinkable could happen to one of us is worth more than the cost. There are different types of life insurance available subject to insurability.

Death benefit amounts per insured can be addressed a couple of different ways. One method is eight to ten times the income of the insured. Another option is to use a life insurance needs calculator located on insurance company websites. This will factor in current debt, college expenses, and income to the surviving spouse or caregiver.

Insurance is designed to transfer the risk of losing an income stream or potential income, if someone passes too early, to an insurance company. It’s important to think how a family would be affected if the primary breadwinner was to die unexpectedly without a life insurance policy. This applies for a stay at home parent as well. There is value having a parent available to the children at home during the day therefore life insurance should be a consideration for that individual as well. If that person passes, how will you provide the additional care and expenses to the children? A person may need to be hired to help with after school activities and transportation, for example.

Insurance is designed to transfer the risk of losing an income stream or potential income – if someone passes too early – to an insurance company.

In our household, we have term policies for both of us that name each other as beneficiary. Term policies are set up for a specific period of time ranging from 10- to 30- year terms at a pre-determined death benefit and cost. This does not change even if your health changes. Once the policy term ends, the coverage ends and the traditional policy has no return of premium or cash value. We chose not to have any type of cash value or variable policy due to the cost and we can use that money elsewhere in our long-term financial plans.

Policies that have cash components cost more and the cash or invested portion is not given to the beneficiary in addition to the death benefit amount of the policy. The premium is higher and only a small portion is actually added to the cash or investment sub-account that is tied to the policy. I encourage you to learn about the different policies and ask how they fit into your financial planning.

According to LIMRA, an insurance research group, the percentage of US households that have no life insurance of any kind, whether through work or personally purchased, is 30 percent. The number of households with life insurance has dropped in the last six years by 11 million. Are you in the 30 percent? Please protect your family’s financial future; take time in September to contact an insurance agent in the area or review your policies with your agent. cg

Kate is a financial expert of what to do and not do with money as well as owner of 4 Walls Financial, A Coaching Focused Company. She has attended and completed Dave Ramsey’s Counselor Training. Follow Kate on Twitter 4WFCoach, reach out to her via email at or visit Feel free to share ideas or questions for future articles.

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