Life Insurance: The Most Reliable Source of Financial Security

This is a financial column, but Life Insurance isn't always thought of as a financial product as we think of investments. Yet for most families it's the cornerstone of their financial well-being. In these uncertain times, the most reliable source of money for family's (or businesses!) with the loss of a provider is a Life Insurance policy. Let's look at your other options: Retirement plans, IRA's and 401 (k)'s are still largely depleted due to a very tough economy. Importantly, retirement plan monies withdrawn will be taxable as income.

Unlike retirement plans, Life Insurance benefits are paid tax free (Roth IRA's are an exception, the money is not taxable). Even if you have other assets you think you could draw upon, would you want to be selling off assets instead of having money available from the Life Insurance? For instance - your house may be worth money but do you want to sell it? Would you want to sell it in this market? Life Insurance is by far the most inexpensive way to make sure your assets can remain intact.

How to Determine How Much Life Insurance to carry:

This is a simple yet important process. You have to sit down with a pen and paper and review all your household expenses. Just as important are future expenses such as college money, credit card debt, mortgage debt.

Valuing The At-Home Spouse:

Too often, the value of the at-home spouse is not recognized. The bread winner buys the policy and often families think it ends there. It doesn't. There is a significant amount the at-home spouse does that if they weren't present would result in a great cost for the surviving spouse. Who will drive the kids around, keep the house up, make dinner, review homework? The list goes on and on. I always advise households to have 2 policies, one on each parent. If the applicants are healthy, the cost of the insurance is usually low and well worth the expense.