Understanding the Value of Life Insurance
Unfortunately when one of the family bread winners dies, there will usually be a notable financial loss to the family. It may be the provider of the primary income for the family, or it may be the person who is responsibility it is to care for the children.
When someone dies the loss of income from the person’s salary or other generated income is referred to as human life value. This value is based upon the expected future earnings of the individual had they not died. This value is also calculated for those who are primary care givers for the children of the household. This role as caregiver also has a monetary value, something that most people never even think of until it’s time to make other arrangements. The monetary value for caregiver services is calculated by using the cost that would be incurred to duplicate the services provided by the primary caregiver.
Logically, for most individuals the sole reason for life insurance is to replace the income lost due to their death. This money is intended for the surviving members of the household to sustain them when the deceased party can no longer bring home a paycheck. The death of a working family member puts an enormous amount of stress mentally on the family, and with the income of that person gone as well, financial hardship can follow if the death has not been planned for in advance.
In years past, it was the male figure of the household who was the sole bread winner for the entire family. The female of the household took care of all things domestic including the kids. Nowadays, working mothers are the norm, and stay-at-home dads are not uncommon. Working mothers are sometimes the higher paid spouse. Either way, the monetary loss sustained by losing either is great.
With personal debt being at its highest ever in the U.S., oftentimes families are barely scraping by financially while accumulating very little if any personal savings. With economic data showing some families to actually being in the negative financially, it is disturbing.
It is reasons like this that make life insurance such a valuable financial asset to the American family. Not only is it used for burial of the deceased, but it is meant to relieve the financial hardship of the loss of the deceased party’s income.
It’s a sad fact, but those who need life insurance the most are those who never consider needing it. Most people think of life insurance as a burden to pay rather than what it actually is, and that is a hedge against the inevitable.
If you are unsure of your insurance coverage and whether or not it would cover your family’s needs in the event of your death, then I strongly urge you to evaluate your family’s financial obligations and plan accordingly. It takes very little time to speak with an authorized insurance agent, who can help you asses your life insurance needs.