If you have children, you would probably go to almost any length to protect them. Many parents feel that way. Yet, despite those strong protective feelings, many parents in the United States haven’t taken a simple precautionary step to protect their children from a real and dangerous risk.

What is the risk? It’s the early death of the parent. When a parent passes away at a relatively young age, the event can leave a surviving spouse and children in a difficult financial situation.

Fortunately, the risk can be easily managed with life insurance coverage. However, according to a 2015 Bankrate survey, one-third of all respondents who had minor children in the home said they had no life insurance coverage. Of those who do have insurance, nearly half said they had less than $100,000 in coverage and slightly more than 20 percent said they had less than $25,000 in coverage.1

You may have life insurance coverage, but how do you know if it’s enough to fully protect your family in the event of your passing? Below are four questions to ask yourself about your family’s needs and your coverage. Your answers to these questions should provide you with guidance as to whether you need more life insurance protection.


Would your family be left with any debts they would be unable to pay?

You may have debts linked to your home, your car, credit cards and maybe even your education. Unfortunately, most of those debts don’t die with you. Even if you pass away, your spouse or other loved ones may be responsible for servicing the debt.

Can they afford to do so? Would they have to sell assets, move to a new, smaller home or even declare bankruptcy? Life insurance can give them the liquidity they need to pay off debts and stabilize their financial situation. If you have debts, you may want to consider whether your current coverage is enough to pay off those obligations.


Would your family have enough income to maintain their standard of living?

Another consideration is whether or not your family could afford to maintain their standard of living after you pass away. This is a real issue if you happen to be the breadwinner in the family, or if your spouse stays home with the kids.

Is it realistic he or she would be able to immediately increase their income to pay the bills? If not, you may want to leave enough money to fund a transition period for your family. This is a time in which your family adjusts to the new normal of not having you around. It could last years, and it gives your spouse or partner time to possibly gain new skills and launch or boost their career and earnings.

Consider providing enough death benefit to help your family through this troubling time. They will likely be hurting emotionally, so you probably don’t want them hurting financially as well.


Would your death generate additional expenses your family would have trouble paying?

Even if you’re not the breadwinner in the household, your death could have a substantial impact on the family’s finances. For instance, perhaps you stay home to raise the kids and manage the home. If you passed away, how would your spouse fill those roles while also maintaining his or her career?

They may need to send the kids to daycare or they may have to hire a nanny. They may need cleaning or cooking assistance. They may have to scale back their work hours and reduce their income so they can focus more time on the family.

All of those actions generate costs. Life insurance can help soften the blow and provide financial assistance during a difficult situation. You bring value to your home. Be sure to consider that value while estimating your life insurance need.


Would your dependents be unable to reach important life goals because of your death?

Every parent has big dreams for their child. Maybe you want to see your child go to the best college possible or maybe you’d like to see them start their own business. If you were to pass away, these dreams could become even more important and meaningful for your children.

You can use life insurance as a tool to protect their dreams—even if you pass away. You can designate multiple beneficiaries on a life insurance contract and even specify how much money each beneficiary receives. You could also use a trust to make sure the death benefit is used for a specific purpose.

These questions are helpful starting points, but they don’t provide a full analysis of your needs. For a more complete picture, contact us at Trinity Financial Group in Omaha. We welcome the opportunity to identify your family’s needs and to help you find the best protection strategy. Let’s start the conversation today.

1 http://www.bankrate.com/finance/insurance/money-pulse-0715.aspx


This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

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