What is life insurance?
A life insurance policy is a contract with an insurance company. In exchange for premiums (payments), the insurance company provides a lump sum payment (a death benefit) to beneficiaries when the insured dies.
Who needs it?
If someone will suffer financially when you die, you may need life insurance. It provides cash to your beneficiaries after your death. The cash (death benefit) provided to your beneficiaries after your death can help replace your absent income for a period of time. It can help meet important, immediate financial needs like funeral costs, daily living expenses or college tuition.
HOW DOES LIFE INSURANCE APPLY TO YOU?
Many single people don’t believe they need life insurance. Did a parent or guardian co-sign a college loan for you? They will be held responsible for those costs if you pass away. You might be providing financial support for aging parents or a sibling with special needs. You might have significant debt - would you want to pass it onto family members? If you’re young and healthy, and you have a strong family health history, you’ll generally receive better life insurance rates than if you wait until you’re older.
You’re Married With Kids
Families today often depend on two incomes. What would happen if you suddenly died? Could your family continue to meet all of their financial obligations—rent or the mortgage and daily living expenses? Could your family continue its standard of living on your spouse’s income alone? What about your children’s future? Life insurance helps plan for and protect your family's future.
You're a Single Parent
You wear many hats - income provider, caregiver, cook, chauffeur and more. Unfortunately, four in 10 single parents don't have life insurance, and many who have coverage say they need more. With so much responsibility, it's important that sufficient life insurance has been purchased to protect your children’s financial future.
You’re a Stay-At-Home Parent
You are an integral part of your family's support system, even if you don't earn a salary. Raising your children, transportation, and housework are all important, and the cost of having someone else handle these concerns is often severely underestimated. With life insurance, your family can afford to make the choice that best preserves its quality of life.
You Have Grown Children
Your kids have graduated from college and the mortgage is paid. The need for life insurance still exists! If you die today, your spouse will continue to have daily living expenses. Will your financial plan, without life insurance, enable your spouse to maintain the quality of life you’ve worked so hard to achieve?
Depending on the size of your estate, your heirs could be liable for an estate-tax bill up to 40% after you die. Life insurance proceeds are payable upon death; your heirs can take care of incurred taxes, funeral costs and other debts without having to liquidate assets. Life insurance proceeds are generally income tax-free1 and won’t add to your estate tax liability, if properly structured.
1Estate taxes may apply to insurance proceeds. The tax information contained herein is general in nature, is provided for informational purposes only and should not be construed as legal or tax advice. Catholic Order of Foresters does not provide legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Life insurance can protect your business. What would happen to your business if you, a fellow owner or a key employee died tomorrow? To protect a business in case of a key employee's death, key person insurance (payable to the company when named as a beneficiary) provides the owners with financial flexibility to hire a replacement or determine an alternative arrangement. A life insurance policy can be structured to fund a buy-sell agreement; this helps the remaining business owners have funds to buy the deceased owner's company interests at a previously agreed upon price. It can ensure the owners get the business, the family receives the money, and the business continues.