No one likes to ponder the possibility of death. But part of being a responsible partner is purchasing an adequate amount of life insurance to care for family left behind. However, according to Life Happens, around 43 percent of Americans do not have any life insurance coverage at all. This leaves their families financially unprotected in the event of an unexpected death. And unexpected doesn’t necessarily mean sudden. If you develop any fatal condition, life insurance purchase is generally off the table. What help is there for families without life insurance when an adult dies? As it turns out, not much. Let’s run down some of the limited assistance available.
“43 out of 100 Americans do not have life insurance coverage today and the number 1 reason for not buying is perceived cost.”1Best Life Rates dot Org
If there is a glimmer of hope for family left behind when an uninsured parent or spouse dies, it’s Social Security. An eligible worker’s survivors may qualify for monthly benefits based on the decedent’s work record and earnings. Benefit recipients must meet all of the requirements prior to receiving assistance, with amounts based on a percentage of the worker’s wages and length of work history.
In addition to survivor’s benefits, Social Security offers a one-time death payment to families of deceased recipients, but it’s by no means a windfall. Social Security figures the exact amount of this payment as three times the Primary Insurance Amount, which is the amount of the decedent’s monthly benefit at full retirement age, or $255, whichever is less.
The families of deceased veterans may qualify for both ongoing and burial benefits from Veterans Affairs. The VA’s Survivors Pension is available to low-income, unmarried surviving spouses or children of veterans who served during times of war.
VA burial benefits vary based on whether the death is service related. For service-related deaths, the VA pays up to $2,000 toward final expenses. For non-service-related deaths, the VA pays up to $749 for decedents hospitalized at the time of death or $300 for those decedents not hospitalized at the time of death. A small plot or interment allowance may also be available.
Without Life Insurance, you may qualify for Indigent Burial Assistance
Although availability varies widely, some localities offer burial assistance for families who cannot afford to bury a loved one. This type of indigent burial assistance in Illinois, for example, pays up to $1,103 for a funeral or $552 for a cremation when the family cannot afford such expenses.
Go Fund Me
More and more frequently, Go Fund Me pages (gofundme.com), are springing up in times of dire need. Rather than insuring risk, people are crowdsourcing after tragedy and hoping that the multitude of people exposed to their plight, through a heartfelt online appeal, will answer the call and help in their time of need. In many cases, this is working very effectively at helping to cope with initial expenses and modest needs, but very few times, do these appeals reach a level that adequately lays a foundation for survivors to build upon.
Best to get some life insurance coverage
As you can see, the availability of assistance for families left behind when a wage earner dies without life insurance is minimal at best and nonexistent at worst, which underscores the need for all families to purchase this invaluable coverage. Even when families have assistance for funeral expenses, the loss of income going forward is usually the biggest burden for survivors.
The Insurance Information Institute recommends that in addition to $15,000 for burial and other final and estate-related expenses, families have life insurance equal to 20 times the amount of annual income usually generated by the decedent as well as funds to cover any health insurance benefits lost upon the person’s death. This ensures that survivors continue to enjoy the same quality of life going forward without the contribution of the deceased.
This amount can vary significantly based upon the family’s age. With younger children, more replacement income is needed. As we age, the needs naturally decrease.
Getting life insurance is a fairly simple, but time consuming process. There are a lot of myths out there that confuse the process. To get the cheapest premiums, you will need to undergo full underwriting (a fancy term for examination of your health, family history and other factors), but this can pay big dividends as fully underwritten life insurance for the healthy can be 2-3x less expensive that some life insurance products.
So should I accept the group life insurance from my employer? If it is employer paid, why wouldn’t you? But remember, it is only a small policy and will likely not cover all of your needs, and since it is a group policy, the rates will be higher as insurers have to take good and bad health candidates.
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