Family Coverage Review
Protecting Your Family Members
If your spouse dies prematurely, what will the impact be on your
family earning power and expenses? What steps have you taken to
establish a savings program for your children?
Few people realize that a 30-year-old couple will earn 3.5
million dollars by age 65 if their total family income averages
$100,000 for their entire careers, without any raises.
If something happens to your spouse, what will the impact be on
your family earning power? What new expenses will be created?
What steps have you taken to establish a savings program for
your children?
You need to protect both yourself and your spouse for the
future. If you or your spouse should die suddenly, your family
income may be reduced dramatically. Even if your family income
remains unchanged, certain expenses may increase significantly.
For example:
- The cost of raising a child from birth in 2008 to age 18 is
projected to be $221,190 for a middle income family, and that
doesn't include college costs. (Source: Expenditures on
Children by Families, 2008; U.S. Department of Agriculture;
released July 2009).
- Child-care costs vary widely based on quality, age of the
child, type of operator and region. Prices ranged from $4,055 to
$11,680 per year for a 4-year-old child and from $4,560 to $15,895
for an infant in 2008 (Source: Parents and the High Price of
Child Care: 2009 Update, National Association of Child Care
Resource and Referral Agencies).
- In 2009-2010, the average annual cost for a four-year public
college is estimated at $15,213 and at $35,636 for a private
college (Source: The College Board Trends in College Pricing
2009).
- If something were to happen to your spouse, you could be facing
these costs alone -- for each child!
You need to protect all of your family members against the
financial consequences of the unexpected.
- According to Funerals: A Consumer Guide, a traditional funeral,
including a casket and vault, costs about $6,000, although "extras"
like flowers, obituary notices, acknowledgment cards and limousines
can add thousands of dollars to the bottom line. Many funerals run
well over $10,000 (Source: Federal Trade Commission, June
2008).
- The above does NOT include the cost of a grave site, cemetery
fees or a monument or marker, which can add $2,000 or more to the
cost of a funeral.
Here Are Some Important Facts About Social Security Survivor
Benefits
Assuming your spouse is covered by Social Security at his/her
death...
- The Social Security survivor benefit you receive is
based on your spouse's earnings history at the time of
his/her death and is limited to a maximum family
benefit.
- The monthly family survivor benefit is payable only until
your youngest child reaches age 16.
- Your youngest child then receives a monthly
benefit until age 18 (age 19 if a full-time student).
- You receive NO BENEFIT until age 60. This is
commonly referred to as the "blackout period."
- Beginning at age 60, you receive a lifetime
benefit.
In Purchasing Life Insurance on Your Family Members:
- You implement a disciplined program for retirement, education
and other financial needs that may arise.
- You secure the insurability of your spouse and/or
children.
- If cash value life insurance is purchased, you build cash value
accumulations available for future financial needs.
If your spouse or a child dies prematurely, you will have funds
for:
- Final expenses: hospital/medical, funeral costs, legal
fees.
- Child care and housekeeping assistance.
- Replacement of lost income and continuing asset
protection.
- Time away from work.
- Handling major expenses, such as college education.
The Analysis...
- Identify cash needs and increased expenses that will arise at
the death of your spouse or a child.
- Analyze income needs and sources at the death of your
spouse.
- Determine additional capital required to satisfy these
needs.
- Consider the benefits of establishing a life insurance program
for your children.
To Implement a Life Insurance Plan...
- Select type and amount of life insurance coverage.
- Establish insurability.
- Arrange for payment of premiums.
You Can Manage Your Finances...
It's by managing your finances that you write the story of your
life.
You are both the author and the story's principal character.
Resolve to perform what you ought.
- Benjamin Franklin