Juanita Causey and the Importance of Life Insurance

The median age in the United States is 38. That represents a low number compared to many other nations where the percentage of people over 65 is much higher. For those in their late 30s, however, what are some popular tasks that people aim to accomplish? Some would likely list things like starting a family, getting married, building a solid career, and so on. These goals, of course, do not have to go in that particular order. And although all of the previous objectives are valid, there is something that most Americans should prioritize: obtaining life insurance.

For those unfamiliar, life insurance is a policy that provides a monetary payout upon one's death. The people who are entitled to that payout are called beneficiaries and are determined by the carrier of the policy. So, to better understand the complex sphere of life insurance policies, consider the following scenario.

Introducing Jane Doe

Given the average age of all Americans, imagine a 38-year-old person that resides in Pasadena. To further generalize the scenario, assume that the person's name is Jane Doe and she is married. Additionally, she has two children that are five and seven years old. As far as her work, Jane Doe is a business analyst working for a family-owned company in Pasadena. She happens to be the primary income earner as her husband quit his job to go to Pasadena City College.

The Danger of Unpredictable Scenarios

Tragically, in 2016, the United States saw 2,712,630 individuals die due to various causes. This translates to somebody losing their life approximately every 12 seconds. If Mrs. Doe was to become a part of the very unfortunate statistic, how would her family survive the loss? To be more specific, how would the family overcome the financial struggles that would take place absent a primary income earner? Enter life insurance.

The Basics

A life insurance company in Pasadena operates in a manner based on perpetual payments and investments. Meaning, they look for people like Mrs. Jane Doe and offer them coverage. If the potential customers buy the policies, they sign a contract to keep paying for an extended period of time. In return, the insurance company agrees to pay the beneficiaries a large sum of money in case of the policy holder's death. In the meantime, the life insurance company invests the money that was given to them and hopes to earn high returns.

According to a financial analyst from Houston, Juanita Causey, this is very similar to the way that investment companies work. They accumulate a large amount of money through crowdfunding and invest it into various portfolios. The only difference, per Juanita Causey, comes from the payout that may happen very unexpectedly in case of someone's death.

The Benefits

One of the most obvious benefits of life insurance policies goes back to Mrs. Doe's capacity as the primary income earner. If she were to die, the income she brought to the family would disappear. Given that the hypothetical husband is attending Pasadena's community college, he may be unable to compensate for the loss in a timely manner. Ultimately, the family may even face bankruptcy given the emotional trauma mixed with financial challenges. Well, a life insurance policy mitigates the loss of wages by providing a large lump sum of money. That way, the family will be covered by the paid-off insurance policy that Mrs. Doe already established.

Taxes, Final Expenses, and Savings

Upon someone's death, most assets will be subjected to estate taxes. These can add up to a considerable amount of tax liability. In order to avoid pushing the family into debt, one's insurance policy can be used to cover federal obligations. Additionally, the expenses related to one's funeral are often much higher than expected. Luckily, the proceeds from an insurance policy are almost always enough to cover these costs.

Ultimately, having a lump sum from someone's life insurance policy can jump-start the family's savings. Although Pasadena City College offers great programs, Mrs. Doe's children may want to continue education elsewhere. Thus, starting a college fund or any other type of savings is another great use for the money. In the end, loved ones may even get closure from learning that the deceased party was ready for the worst-case scenario.