Death isn't a pleasant topic. No dollar amount can replace a human life. When death is premature, there may not be enough assets to cover immediate and future needs for those who remain.

Life insurance provides money to reduce the financial hardship for the many ongoing expenses:

• housing: utilities, property taxes, insurance, maintenance
• family: food, clothing, childcare, phone, entertainment
• health: medical, dental

Seven Cash and Income Needs at Death

Here are the seven needs

1. final expenses
2. emergency fund
3. supplement survivor's income
4. charitable giving
5. income for dependent children
6. education fund
7. payoff mortgage

Final Expenses

• accounting fees
• capital gains tax
• debt repayment (car loan, credit card balances)
• funeral
• income tax (terminal return)
• legal fees
• medical costs
• probate fees

Emergency Fund

• e.g., 3-6 times the monthly income lost

Supplement Survivor's Income

• gives spouse time to get back on feet (e.g., 1-2 years)
• may need to continue for life (e.g., if spouse not employable)

Charitable Giving

• helps others and reduces taxes in the terminal tax return of the deceased

Income For Dependent Children

• e.g., until youngest child turns 18

Education Fund

• tuition and living expenses for university or college

Payoff Mortgage

• usually the family's largest outstanding debt
• repayment allows the family to continue living in the home

How Much Insurance?

There are different ways to estimate how much insurance you may need