Secure Your Family’s Financial Future With Life Insurance

Life insurance can help you secure your family’s financial future. The possibility of an early or unexpected death of a spouse or life partner is never an easy subject to broach. However, it must be discussed because many families suffer financially as a result of this.

Many people understand the costs of a funeral, but have you ever considered that your utility bills, mortgage, car payment, or rent will continue to be paid even though your life has been touched by tragedy?

Following the death of a loved one, there should ideally be a period of mourning. Your family would be able to transition without worrying about mounting debts or losing the house if you had life insurance.

This transition period is researched in the life insurance industry, and experts agree that there is a timeframe that people go through when they lose financial support that they were accustomed to having previously.

As a result, life insurance experts advise the following coverage amounts:

  • Those who are breadwinners: 10 to 15 times the annual salary
  • Earn 10 to 15 times a household’s annual income as supplemental income.
  • Have a mortgage that is 10 to 15 times your annual income.
  • Have dependents or children who are not financially self-sufficient: 10 to 15 times the annual salary
  • $300,000 for home caregivers/stay-at-home mothers
  • $10,000 to $25,000 for final expenses / burial coverage
  • For children up to the age of 18: A maximum of $25,000 is suggested.

Life insurance provides a transition for financial adjustment, and a beneficiary receives the death benefit tax-free to spend as they see fit. Life Happens, a non-profit dedicated to “assisting people to be fiscally responsible through the ownership of life insurance and related products,” provides a free life insurance needs calculator here.

Experts advise against naming anyone under the age of 18 as a beneficiary. This is because the state will not accept a death benefit in excess of $20,000 as their responsibility. The court will decide on the minor’s guardianship and a guardian ad litem will be appointed, and the funds will be placed in probate court. explains that, ”A guardian ad litem is only required prior to a hearing on the ward’s competence, although a guardian ad litem or next friend may be appointed to represent the ward’s best interests in subsequent litigation.”

The state will then appoint a financial guardian, who will also be referred to as the minor’s “person guardian.”

Probate judges will consider “testimony from all interested persons, including minors if they are over a certain age, usually 12 or 13.”

If the death benefit is less than $20,000, the state may allow “interested” adults to petition for the funds to be placed in an account under the state’s Uniform Transfers to Minors Act or Uniform Gifts to Minors Act (UTMA and UGMA, respectively). Additionally, the funds could be petitioned to go into a 529 account for future college tuition disbursement. The funds will be held in the account for the child until they reach the age of majority, which is usually 18 but can be 21 in some states.

If the death benefits exceed $20,000, the state’s probate court will appoint a conservator on the minor’s behalf. The money is to be spent at the discretion of the conservator. They are not subject to the same fiscal constraints as trustees.

If the death benefit exceeds $20,000 and cannot be placed in a UTMA, UGMA, or 529 accounts, a person is designated as a beneficiary. If the death benefit is more than can be placed in a UTMA, UGMA, or 529 account, “an amount that can be placed in an account, ”that probate judges will take into account the “until the minor is 18 (in most states) and the state will determine who the next of kin is to receive the money. It is recommended that you establish a trust to ensure that the funds go directly to your children for their needs.

A trust is a legal arrangement in which you name a trustee who receives the death benefit and disburses funds according to the wishes of the trustor (the person who established the trust) and records every transaction involving the funds in a ledger. When the death benefit is to support those under the age of 25, experts agree that parents name the trust as the beneficiary for life insurance. The funds would then be transferred to the children when they reached “contingency age,” which is typically 18 to 25.

If death benefits are to go to children under the age of 25, a probate situation in which the death benefits are held due to a beneficiary under the age of would hold the fund’s applications.

If you want your death benefit to go directly to your children’s care and support.

Any financial institution can establish a trust upon your death until the minor reaches the age of majority.