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February 11, 2013

Life insurance: The perfect Valentine’s Day gift?

By Allie Johnson, InsWeb.com

Are you trying to dream up the perfect Valentine’s Day gift for the love of your life? Experts have a suggestion that certainly isn’t over-the-top romantic: life insurance.

The holiday that celebrates love should serve as a reminder to do everything you can for those you care for, including providing financial security by making sure you’re adequately insured, says Marvin Feldman, president and CEO of the LIFE Foundation, a nonprofit dedicated to educating consumers about life, disability and long-term care insurance.

To encourage consumers to think of showing their love beyond cards and roses in February, the nonprofit each year runs the Insure Your Love campaign, which uses tools like public service announcements and quizzes to get consumers thinking about whether they have enough life insurance.

Loving someone means you want the best for them, Feldman says. But if you die without being adequately insured, it could force the one you care for to find work or get a second job, move to a less expensive home and put plans on hold – all while grieving. “When you lose someone tragically, the emotional burden is enough to deal with,” says Jeff Rose, a certified financial planner who runs LifeInsuranceByJeff.com.

Love before marriage

It’s a given that spouses who depend on each other financially need life insurance, experts say, but what if you haven’t tied the knot? Life insurance still might be a good idea to protect your girlfriend, boyfriend or partner. Here are some scenarios where it might be needed, according to Feldman: Life insurance Valentine's gift

• You’ve been dating and have fallen in love, but he or she is carrying a lot of debt. If anything were to happen to you, you’d want your other half to be able to pay those creditors and make a fresh start.

• You and your partner live together, have a joint bank account and share a mortgage that would be tough for either one of you to pay alone. You’re practically married, except for the rings and the marriage license.

• You recently got engaged, and you’re flipping through wedding magazines and dreaming of honeymoon destinations. The time to get life insurance is now, while you’re younger, and maybe healthier, than if you wait a few years, Rose says.

• Maybe you’re divorced and your kids are grown, but you adore your grandkids and would like to leave them some money.

The bottom line? Whether you need life insurance depends on two things: your finances and your feelings. “Do what your heart tells you to do,” Feldman says.

Where to start?

So, if you’ve decided you want to get life insurance or to bump up your coverage, what’s the best way to do so? Experts recommend taking these steps:

1. Estimate your needs – Use an online calculator to get an idea of how much coverage you need, Feldman recommends. If you already have coverage, the calculator will help you figure out whether it’s enough.

2. Go to a pro – Visit a certified financial planner or life insurance agent who can help you decide which type of life insurance is best for you. For example, should you buy term life insurance, which pays a set amount if the policyholder dies during a certain time period, such as 20 or 30 years? Or would you be better off with a policy that accumulates a cash value? A pro can help you sort through other details, such as who, or what, to name as your beneficiary, Rose says.

3. Don’t procrastinate – If you’re putting off getting life insurance because you’re too busy, see whether your employer offers life insurance. Rose usually advises against getting life insurance through work because the amount offered can be too low and many people change jobs regularly, forcing them to get new insurance each time. However, he says it can be a temporary solution for procrastinators. “It can be as simple as going to HR and signing a form and having $10 a month deducted from your paycheck,” he says.

Chocolate, romantic dinner – or life insurance?

In a survey conducted by the LIFE Foundation, one out of four people said they thought life insurance would make a good Valentine’s gift.

So, should you buy life insurance, wrap the policy in a red bow and give it to your loved one on Valentine’s Day in lieu of diamond earrings, a hot air balloon ride or a box of truffles?

That’s probably not the most romantic thing to do, Rose says. “Valentine’s Day is for the flowers, the chocolate, the dinner and the card,” he says. “But the day after, it’s time to get on the ball and get life insurance.”


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