Magazine article Working Mother

What's Your Life Worth?

Magazine article Working Mother

What's Your Life Worth?

Article excerpt

When Gail Quinn was 12 years old, her uncle died suddenly at age 42, leaving behind a stay-at-home wife and six children. "I remember their life changing drastically overnight. My aunt had to go back to work, and their lifestyle was forever different," says Gail, a single mom to sons Patrick, 12, and Ross, 10. "It made such an impression on me that I vowed to get a college education so I could provide adequately for my family either through my salary or through life insurance benefits."

Gail learned about life insurance the hard way, but she learned a lesson many working moms resist. If you have loved ones counting on your financial support-and most working mothers do, from their kids to elderly parents -you probably want to give life insurance some serious consideration.

Today, half of all families depend on both partners' incomes to make ends meet, yet just over one third of women are protected with group life insurance at work. And fewer than half have their own individual policies, according to LIMRA, an association of financial services companies. Women who do own life insurance have much less coverage, on average, than men, LIMRA finds.

"There are too many underinsured couples putting their families at risk," says Bethany Wood, assistant VP for women and business owner advocacy at MassMutual U.S. Insurance Group. "Many women are uninsured or underinsured because it can be difficult for them to talk about such scenarios." But talking about the "what ifs" with your partner and family is a good place to start. Then follow these five steps so you can evaluate your needs and get the coverage that makes the most sense for you and your family.

Understand your choices

The basic purpose of life insurance, of course, is to protect those who depend on your financial support. Dependents include children who still live at home or have yet to graduate from college. But a dependent could also be anyone who's financially dependent on you, like a spouse, a sibling or an aging parent. The insurance is meant to replace your "value" to your family once you're gone. For a working parent, a big part of that value is your salary. If you the prematurely, life insurance is designed to step in for you and cover your family's financial needs. As Jim Avery, president of individual life insurance at Prudential Financial, puts it, "Life insurance is a way to protect the hopes, dreams and financial future of your loved ones." Anytime someone - such as your kids - depends on your income to pay for his or her living expenses, you need insurance.

Two major types of life insurance are term and whole (or permanent). Term insurance, which is generally less expensive, is often a good choice for busy working families, says Jack Hungelmann, an insurance agent in Minnesota and author of Insurance for Dummies.

Term insurance covers a specific amount for only a specific period of time, such as ten, 20 or 30 years. It can be used for family protection until children reach a certain age or to pay off your mortgage or other bills if you the within a specific time frame. Whole (or permanent) life insurance offers a specific value at the end, such as a cash value of $90,000 at age 90. "The biggest mistakes I've seen are people who buy life insurance before they need it, such as when they're single or have no kids and no debt, or who buy permanent insurance when they really need term insurance," says Hungelmann. "Everyone I've met in my career who bought permanent was underinsured, because it's so expensive to buy."

Of course, your personal needs and goals must be considered. However, many experts agree that term life is typically the lower cost and the simpler option. You pay the premium and get covered for the term. Term life policies can also be easily compared on the basis of price. This has led to a competitive market. As a result, term life insurance is not only more economical but also convenient since you can buy it directly without paying a middle party. …

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