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Answers for Men
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Traditionally, the primary purchasers of life insurance
 Men
need to ask themselves the same questions as women, but they need to
address additional issues. Women are catching up to men in terms of
insurance needs, total income earned over a lifetime, social security and
other financial areas. But men still need to plan for their own
future and/or the future and security of their family.
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As a man,
what determines my need for life insurance?
If you're the sole breadwinner for a large family, with
little savings, then life insurance is essential. Once basic items
such as shelter and food are covered, life insurance should be next on
your list of priorities. Imagine yourself gone tomorrow. What
would be the immediate impact on your family? Are they counting on
your paycheck in the years ahead to cover basic needs and future savings
goals? Could they afford the funeral costs? Who would pay the
home mortgage? Life insurance protects those who depend on your paycheck,
such as your wife, children and quite possibly, your parents. If you
die prematurely, life insurance can provide ongoing income to your
dependents, until they are able to live comfortably without it. It
can also provide emergency support for legal, medical and funeral costs,
should family savings not be sufficient to cover them. At this stage
in your life, if you still don't have life insurance, maybe it's time to
consider getting some, if not for your sake, for your family's.
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How much life insurance do I
need?
So you finally decide to get insurance.
The only other important issue left to take care of is how much
insurance, and for how long? The easiest way to approach
this is to ask yourself: If you're the primary caregiver to
dependents, what will it cost to replace you with a paid provider,
and for how long? The most basic way to calculate your
insurance needs is to replace your annual income until you retire.
Start with your current annual before-tax salary, and estimate how
many years left until retirement. Once you have these two
numbers, you can figure out how much insurance your family will
need in order to replace the lost income should something
unfortunate happen to you. For example, to replace a salary
of $35,000 for 25 years, you're going to need at least $575,000 of
life insurance coverage. A rule of thumb is to buy life
insurance equivalent to five to eight times your annual gross
income. You should also consider individual factors such as
income potential, ordinary expenses, extraordinary expenses, and
federal estate taxes.
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How does
life insurance fit in with my financial planning goals?
No matter what your age or
financial status, you have financial goals. Your
goals are the things you want to make the future
brighter for you and your family. It's easy to
come up with some general goals for us as men and for
our family’s future. Life insurance helps in the
event of our death, to keep those goals on track.
Loss of income, and loss of a principle contributor can
totally change that financial plan, making it impossible
to accomplish without the proper life insurance plan in
place.
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What type
of life insurance is best for me as a man?
In general, there are two basic
classes of insurance to choose from: term life insurance, and whole life
or cash value insurance. Term life insurance is just that -- life
insurance, and nothing more. The premium payments are applied 100% to the
cost of the insurance. As retirement approaches, the need for life
insurance is likely to decline, as children become able to support
themselves and retirement savings begin to approximate a lump-sum life
insurance payment. At this point, term insurance can easily be
dropped. Typically, term insurance is more affordable and has a
higher death benefit. Each man’s situation may require something
different. In choosing the type of life insurance policy for you,
consideration must be given to the need which is being filled:
family provision, mortgage protection, funding retirement needs, creation
of an estate, payment of estate settlement costs (federal and state death
taxes, last illness and burial costs, probate fees, etc.) The
American Fraternal Union can help you assess your insurance needs and
which products will best solve those needs.
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In the
event of my death, do my beneficiaries pay tax on life insurance received?
No. Death benefits are tax-free to your
beneficiaries. However, if your beneficiaries die
before you do, the death benefit will be paid to your
estate and may be subject to estate taxes. That's
why it is important to keep your beneficiary information
up-to-date. It's also a good idea to name a
secondary, or contingent beneficiary in case you outlive
your primary beneficiary. |
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