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Life Insurance: A Woman's Financial Safety Net

Why life insurance is a financial safety net for women

Women need to face the fact that many will outlive their husbands, leaving an emotional and financial void. The fact is, seventy-five percent of American married women will become widows and need to support themselves. Even more concerning, nearly 85% of the elderly poor in the nation are female. This doesn’t have to happen to you if you have a plan.

Replacement of income is one of the primary reasons to purchase life insurance. However, only 61% of Americans have life insurance according to LIMRA. With the average American male making more than the average female – women should lead the discussion.

Talk to Your Spouse

Discussing life insurance with your spouse is sometimes a difficult conversation. But it’s a conversation that should happen. Sit down and have each person list the things they want for their family in the future. Larger home, college education for the children, early retirement, etc. Then compare those lists and determine how much you’ll need to achieve those goals if your spouse’s salary is lost.

Over our lifetime, a person’s total income can add up to a sizeable sum. This amount would help protect the financial future of those left behind. For example, a 40-year old who earns $50,000 a year will earn $1.25 million if they work to age 65. Adding just a 2.5% annual inflation factor, the future earnings are nearly $1.7 million. 

How Much Life Insurance should you buy?

Once you’ve started the discussion, then you need to decide how much life insurance to purchase. How much will you need to replace your spouse’s future income?

The United States Department of Justice distributed a formula to the surviving family members of those lost on September 11. As an example, the economic loss of a 30-year-old married individual with two children who was making $50,000 a year is nearly $2 million. 

That calculation goes far beyond the two or three times income that many employers offer as group life insurance benefit. 

Other Key Factors

Women have several other factors to consider:

  • What are your other outstanding debts – from mortgage to credit cards
  • The future costs of your children’s’ education
  • How much will you need to maintain your lifestyle into retirement 
Other Sources Of Income

Once you have put together your profile, consider any additional income you currently have to help you determine if you need to increase or decrease the amount of insurance you’ll need. Some of these additional income sources include: 
  • Other life insurance policies
  • Taxes that reduce take-home pay 
  • Savings and other assets 
  • Earning power of survivors 
  • Social security benefits for children 
  • Duration of the income need 
A life insurance professional can recommend the best life insurance policy based on your current and future financial needs. The best advice is to shop around for the lowest possible rates, commissions and fees. You’ll be glad you developed a plan for your family’s financial future.

About the Author:

Patty Reiners is a life insurance and annuity professional with Ameritas Direct, the division of Ameritas Life Insurance Corp. that markets the No-Load Series of insurance and annuity products to self-directed consumers. For more information, quotes and calculators visit www.ameritasdirect.com.

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