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You are probably already insuredDec 09 '03 (Updated Dec 10 '03) Write an essay on this topic.The Bottom Line Don’t forget about the insurance you already have when evaluating your need for more. When assessing your need for life insurance, it's important to consider the coverage you may already carry. Many employers, for instance, offer group term life insurance--a $100,000 death benefit is common--as part of their standard benefits package; if the insurance is free (or cheap) and your job is reasonably secure, you should certainly take that coverage into account when calculating how much life insurance you need to buy elsewhere. Another form of life insurance that most of us have--and that most insurance salespeople will conveniently fail to mention--is Social Security. Social Security normally will provide survivor benefits to the deceased's children under age 18, and to a widow(er) who has not remarried and who is caring for the deceased's children under age 16. Only the survivors of those who have contributed to Social Security are eligible for these benefits, and the amount of the benefits depends upon the amounts contributed, as well as upon the number and timing of Social Security credits earned. For the complete and somewhat complex eligibility rules, you should consult chapter four of the official Social Security Handbook, which is available on-line at www.ssa.gov/OP_Home/handbook/ssa-hbk.htm (the chapter also describes benefits payable, in some circumstances, to widow(er)s without children and to parents of the deceased). Social Security survivor benefits can be substantial--$25,000 or more per year, adjusted annually for inflation. To see how much your surviving spouse and children may be entitled to receive should you die this year, check the second page of your Social Security Statement (one is typically mailed out each year; if you have misplaced yours, you can request another at www.ssa.gov/mystatement/). Note that, depending on the survivors' income, up to 85% of the benefits may be subject to taxation. Finally, veterans should remember that their surviving unmarried spouses, and their children under age 23, may be entitled to substantial survivor benefits through the Department of Veterans Affairs. For details, see the VA's guidebook, Federal Benefits for Veterans and Dependents, which may be downloaded at www1.va.gov/OPA/feature/. Obviously, employer-provided life insurance and Social Security and VA survivor benefits should be factored into any estimate of the need for additional protection. Indeed, some people may find that the coverages they already have are perfectly adequate, and that they have no need to purchase more life insurance.  |
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