Life Lessons

Mike Thompson died in a car accident
leaving behind his wife, Amanda, their
two boys and stiff financial challenges.
“After that,” Amanda recalls, “I put the
house up for sale and we moved in with
my mother.” About six months later, she
purchased life insurance on herself telling
her agent, “I don’t want this to happen to
my children.”

Amanda’s story illustrates how
being without life insurance can leave
families vulnerable to financial hardship.
However, the need for life insurance is
not limited to families.

When you’re single with no dependents,
you may not need much life insurance.
But you should at least have enough to
cover final expenses, so your parents or
siblings aren’t burdened with these costs.
Once you’re married, you share a life and
a home with someone else. Now if the
worst happens, your spouse may be left
with a rent or mortgage payment they
can’t afford. At this point, it’s time for
both spouses to get individual life policies.
When you have children, you have
their future to think about. Life insurance
can help your spouse keep up with
child care and other expenses, as well
as save for education and retirement.
In retirement, life insurance becomes
an important part of your estate plan
allowing you to pass wealth to future
generations or a charity.

There are two basic categories of life
insurance — term and permanent. Term
insurance can be purchased in large
amounts for a small initial premium. It is
well suited for short-term goals. Coverage
lasts for a specified term. After this term
has ended, it expires unless renewed by
paying higher premiums.

Permanent life insurance provides a
death benefit while the policy is in force.
The premiums are initially higher than
those of term insurance, but in many
cases they can be cheaper over the life
of the insured. Permanent life insurance
usually builds up a tax deferred cash value
and is well suited for long-term goals.
Whichever option you choose, make
sure your policy coverage keeps pace
with your life stage — now and in the
future.

Written by Lynda Housley, a State Farm agent based in Corsicana.