Why is it Getting So Dark in Here? The Life Insurance Blackout
In life insurance planning, it is essential to divide the widow(er)'s basic need for life income into two separate periods. One period runs from the youngest child's 16th birthday to the widow(er)'s 62nd, while the other starts when the widow(er) is age 62. This breakdown is necessary because the surviving spouse's income from Social Security terminates when the youngest child hits age 16, with some exceptions, and does not resume until the surviving spouse turns 62. A permanently reduced benefit can be available at age 60. However, for non-reduced benefits, the period in between is referred to as the blackout period.
Income needs, in which an amount of money is needed over a period of time to sustain survivors, are considered cash needs. Cash needs are typically a one-time or otherwise lump-sum need for money which can be planned for and set aside in case of death, or provided through life insurance.
From the family standpoint, life insurance is business necessity, and should be considered by every person with dependents, just like any other necessary business transaction for those who own a company. The care of your family should be first and most important business. The family should be established and run on a sound business model. It should be protected against bankruptcy.
The death or disability of the head of this business should not involve its impairment or dissolution any more than the death of the head of a corporation, partnership, or sole-proprietorship. Every corporation and firm represents capitalized earning capacity and ethical forethought. Why then, when men and women are about to organize the business called a family, should there not be a capitalization in the form of a life insurance policy with real value and ethics behind that business? Why is it not just as reasonable to have a life insurance policy accompany a marriage certificate, as it is to have a marine insurance certificate invariably attached to a foreign bill of exchange?
The journey in the first instance is, on the average, much longer, subject to much greater risk, and in case of wreckage, the loss is of infinitely greater consequence. The lights are always on in our lives, darkness comes when we don’t plan well enough to keep them on, or we simply don’t prepare well enough for the unexpected storms.
About the author: Kyle McDonald holds FIC, FICF, FSCP® & CLTC designations. His viewpoint on life insurance is simple, “Anyone with a family must have life insurance. In the end, life insurance is for others you care about, not you.” He is ready to help you and your family get the best option available. Contact Kyle today at 1-800-651-1953 or KMcDonald@Pivot.com.