Income Replacement Life Insurance

Apr 2, 2009 Life Insurance 101

People buy life insurance for many different reasons, but the most important reason is probably to replace the income of a family’s bread winners in the event of death.  This is what is commonly referred to as Income Replacement Life Insurance.It may be a single parent, a family with both parents working to provide for the family or a couple that has only one wage earner whose family relies on the salary from that single source – the loss of that income due to death can result in a financial crisis.

How Does Life Insurance Help?

• Life insurance can provide a lump sum of money to replace the income lost when a wage-earner dies
• In order to meet financial obligation, dual income families usually rely on both incomes.
• Single wage-earners provide the family’s only source of income to meet family needs. The stay at home spouse may not be able to match that income if the wage-earner dies forcing a dramatic change in lifestyle.
• Single parents usually do it all: support the family, run the car pool, prepare the meals and tuck the kids in at night. The death of a single parent moves this responsibility to someone else, perhaps a relative. Life insurance in the hands of the parents or guardian can help ensure that the childrens’ needs continue to be met.
• Replacing the value of the “stay at home” parent isn’t easy, or inexpensive – the cost to hire someone to take on the child care and housekeeping can add up. Life insurance can provide funds to help.

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