Costs of a tragedy

Personal Finance: Life insurance for non-breadwinners may be smarter than it seems | David Bahnsen

In the last issue I addressed which types of life insurance make the most sense for different objectives and situations. Frequently, readers are in need of regular "death benefit" life insurance—the kind that pays a lump sum of money to the breadwinner's family at his passing as a means of helping to replace his income. This "term" insurance is usually very affordable and is a valuable tool in faithfully planning to provide for one's family. More expensive "whole life" or "universal life" policies have their place, but usually that place is restricted to situations where the need is likely to outlive a term of 10 or 20 years (i.e., business succession, estate tax planning, etc.).

The discussion above addresses the type of insurance called for in a given scenario; what it does not address exhaustively is who needs to be insured. Most life insurance is purchased on the life of a family breadwinner—the key income-generator in a household. Often insurance is needed on the lives of two people, as many two-income families exist today (far more than did a generation ago when the life insurance industry exploded). But is life insurance only to be bought on the life of the breadwinner, or is there a need to have small amounts on other members of the family as well? This difficult but important question warrants your consideration.