Make sure you've got the proper life insurance plan - East Valley Tribune: Ahwatukee Foothills

Make sure you've got the proper life insurance plan

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Joseph B. Ortiz

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Posted: Wednesday, September 21, 2011 9:20 am | Updated: 10:41 am, Wed Jun 6, 2012.

September is Life Insurance Awareness Month. And while a whole month may seem like a long time to focus on life insurance, it's actually a good opportunity for you to realize the important role life insurance can play in your life.

Unfortunately, many people don't have sufficient insurance. A recent report by LIMRA, a research and consulting group, shows the following:

• Individual life insurance ownership among U.S. households has reached a 50-year low.

• Three out of every 10 households (about 35 million households) currently have no life insurance - an increase of 11 million households since 2004. These figures help explain why the nonprofit LIFE Foundation coordinates Life Insurance Awareness Month each September. Simply put, many people don't realize how many ways that life insurance can help them and their families.

To be specific, life insurance can:

• Educate your children. If you were to die prematurely, your life insurance policy can pay, in whole or in part, your children's college education. And if you live a normal life span, life insurance can help to pay for your grandchildren's college education.

• Pay off your mortgage. If you have sufficient life insurance, the death benefit can pay off your mortgage, so your family wouldn't have to move.

• Help pay for your spouse's retirement. Your spouse might be counting on sharing some of the money you eventually withdraw from your retirement plans - such as your 401(k) and IRA - to help with his or her own retirement. If you were to die early, your spouse, as beneficiary, would receive the existing account balances in these plans, but your future contributions would, of course, die with you. Life insurance can help fill this gap.

• Help pay for your retirement. You don't even have to die to reap some benefits from your life insurance. If you've purchased some form of permanent insurance, such as whole life or universal life, you have the opportunity to build a cash balance. And through policy loans or withdrawals, you can tap into this cash to help you pay some of your expenses during retirement.

• Help you leave the legacy you desire. Life insurance can be an important part of your estate plans. To use life insurance properly for estate planning, consult with your legal advisor. Of course, one big question that you may ask is: How much life insurance do I need? You've probably seen those estimates that say your insurance should be worth a certain number of years, times your annual income. Actually, there is no hard-and-fast rule for every single individual. The amount of insurance you need will depend on a variety of factors: Your age, income, size of family, value of home, employment situation and so on. Your financial advisor can help you determine the level of insurance that's appropriate for your needs.

Now that you've seen how life insurance may help you over the years, and you've got a sense of how to determine the amount of coverage you need, you can appreciate the message behind Life Insurance Awareness Month.

This article was written by Edward Jones for use by Ahwatukee Foothills Edward Jones Financial Advisor Joseph B. Ortiz, CRPS. Reach Ortiz at (480) 753-7664 or joseph.ortiz@edwardjones.com. Chartered Retirement Plans Specialist and CRPS are registered service marks of the College for Financial Planning.

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