By Harold Goldman
Women now makeup nearly half of the workforce and are a more central part of a family’s income than ever, yet they are also consistently under-covered and under-funded when it comes to life insurance. According to a 2013 Pew research study, women are increasingly the primary breadwinners among American families.
Four (4) in ten (10) American households with children under age 18 have a mother who is either the sole or primary earner for her family — that is four times the number in the 1960s (NYTimes). This does not even account for the number of housewives or unmarried young professional women out there who are also uncovered. Did you know that permanent insurance policies can help with final expenses, and serve as a savings vehicle or wealth management tool?
If you are an employed woman or if you know one, then it’s time you discussed the important benefits of a life insurance policy with a trusted financial advisor, because whether it is a term or whole life policy, there is coverage out there that will fit your needs and budget.
Why Women Need Life Insurance
It Replaces Your Income When Your Family Needs Support
This is the most obvious reason to get life insurance. If your income is used to support your spouse or dependents, having a policy ensures that they continue to receive that financial support in the event of your death. Shocking word, we know, but imagine what would happen if they lost you (and your income).
Your partner is suddenly left with mortgages, credit card debt, college tuition, and your funeral expenses to manage. That is why life insurance is so important for ANY and every breadwinner. Not only can life insurance help with funeral costs, but these policies can also help cover day-to-day expenses and sometimes more.
Some single women might really need life insurance too, especially if they are those who are caring for aging parents (or another dependent, like a sibling), those with a high debt load (especially if that loan is co-signed), and any high-earning professional who can max out their annual retirement contributions.
A Stay-at-Home Mom has Value Too
Just because you are not pulling in a regular salary, does not mean you don’t need life insurance. Life insurance does more than just cover the lost income of an employed woman, it can also provide a financial safety net for the work of a stay-at-home mother does as well.
The task-oriented support of a housewife is just as important to the family’s welfare as working outside of the home. Imagine the support your partner will need to do things like pay for childcare, hire an occasional cleaner or take time off work to drive the kids around and run errands.
The average price of full-time care for an infant in a center was as high as almost $15,000 a year — that’s no joke. If something were to happen to you, having life insurance would provide your partner financial support.
Some Policies can Manage Wealth and Generate Cash Value
Some women may want to consider purchasing permanent coverage because premiums may be more affordable and will build cash value. Those who may have a managerial position or are single and expect to have a family in the future may want to consider an economical term policy that can be converted to more permanent insurance no matter what happens to your health.
If you are a high-earning individual who can max out their annual retirement contributions to an employer-sponsored or individual retirement account, then a permanent life insurance policy may provide you another tax-advantaged investment vehicle so you can grow your nest egg.
Existing Life Insurance Policies May Need an Update
If you already have life insurance, it may need an update. If you have gotten divorced, remarried, purchased a home, or had another child, you may want to change your policy, perhaps name a new beneficiary, or review the terms of your coverage.
What To Do When You Need Life Insurance
Step 1 – Do Your Research
The first step, as with any major purchase, is to do your research. Talk to your HR department. You might already have group life insurance coverage — some employers offer a certain amount of coverage for free, automatically, with the option to purchase more.
If you’re not sure, consult with a trusted financial advisor or insurance agent. There may be cheaper options or comparable options with better coverage at the price you can afford. Here is a short description of the various types of life insurance you may want to consider.
Explore Your Options
For those who are hopefully off the fence about buying life insurance, there are two basic types of protection for you to choose from: term life and permanent life policies.
Term insurance provides affordable coverage for a specific number of years. This is often the choice when protection needs are high, for a limited period of time and affordability is an issue. Term insurance allows you to obtain crucial death benefit protection at a lower cost than permanent insurance.
Policies typically range from 5 to 20-year terms. Many of these are renewable. However, a term policy is only in force for a specific time and once it expires, you lose the death benefit. In addition, if you plan on renewing your policy for a number of years, the long-term costs could be expensive.
Permanent Cash Value Insurance
Permanent life insurance policies last for your entire life (provided premiums are paid) and your cash value portion grows tax-deferred. A policyholder can take loans against the cash value or funding education, buying a home, and supplementing retirement income- although any unpaid loans accrue interest and also will reduce the policy’s cash value and death benefit.
There are several types of permanent life insurance: whole, variable, indexed, and combinations thereof. Each type varies by the functions and fees of the savings vehicle in the policy.
Purchase Coverage Customized to Your Needs
There are pros and cons to each type of insurance protection and the best option for you depends on your needs. There is a wide range of term and permanent life insurance products available to meet your specific needs. Your life insurance agent can explain the choices available to you.
Harold Goldman – Founder & Sr. Advisor, FinancialSafetyNet, LLC
Harold is the visionary behind the idea of an unbiased financial education utilizing public online platforms. In an effort to promote educated financial decision-making. For over 30 years, Harold has been a successful businessman, estate planning and insurance consultant, agent trainer, and experienced financial lecturer with over 1,000 clients. He is licensed in his home state of California and most other states and has participated in the formation of hundreds of small-business corporations.
As a professional financial educator and advocate for educating the public on financial information which affects them most, he has conducted hundreds of public seminars on retirement planning. Harold also continues to train hundreds of agents on strategies, products, and services, which support the success of their clients.