Life insurance needs should be paramount concern for families

Feb 01, 2011

Families need to consider life insurance when setting budgets

Despite tough economic conditions in many parts of the country, families could be running significant risks by not having enough life insurance coverage, according to personal finance expert Sharon Epperson, writing for USA Today.

There are three central issues to be considered when buying a life insurance policy, Epperson says. The first - and probably the most important - is cash flow, she writes, which can help determine how much a family will need to pay for ongoing expenses in the absence of the breadwinner. The second is long-term capital, or the amount needed to cover costs like mortgage payments and college tuition, and the third is final expenses - for the funeral and burial.

Mary Quist-Newins, a professor at a specialized financial services accreditation university, told Epperson consumers should learn as much as they can about their policy and its issuer.

"Look at the ratings, reputation, reserves and also the retention of policy holders," Quist-Newins said.

Other experts say it can be equally important to learn the difference between term- and whole-life coverage before making a purchase.

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