Losing a loved one oftentimes leaves family members engulfed in grief and despair. Many mourners experience what is referred to as “grief brain fog,” which can leave them with a weakened memory, a short attention span and difficulty with decision-making.
Grief brain fog can be all-encompassing, but even during the grieving process, important decisions must be made, especially with regards to financial matters. If the deceased was a primary wage earner in a household, the decisions made by the family in the wake of the loss may affect their financial security for years to come.
Below are three financial decisions a family may need to make after the loss of a primary wage earner.
1. Decide how to pay for the funeral and other final expenses
Mourners are often hit with a double-whammy—because while they’re grieving, they’re also faced with steep final expenses. An average funeral service and burial costs around $8,000 to $10,000.1 Additionally, there may also be estate taxes, probate fees, and legal fees to address, plus medical bills and debts, if applicable.
Many families don’t have enough cash in savings to cover these significant costs. They will need to decide on another way to cover the costs, such as burial or life insurance benefits, memorial crowdfunding, veterans benefits or employer subsidies.
2. Decide what to do with any life insurance policy benefits
If the deceased had any life insurance policies, the family will need to contact the life insurance company and start the claims process as soon as possible after the death. (Check out this blog post for more information on filing claims.)
Some of the benefits may need to be used immediately to help cover the funeral and other final expenses, but there could be some remaining money. Many professionals recommend depositing life insurance death benefits into a safe money market account, and taking time to think about how to use the money before investing it, spending it or giving it away. For families that receive a large windfall, it may be wise to consult with someone who can provide unbiased guidance and objective suggestions on how to use the money.
3. Decide on a new household budget
After the loss of a primary wage earner, it’s important to quickly assess how the loss will affect the family’s overall financial situation. Determine the family’s household budget by creating a list of monthly expenses and income.
If there’s an income shortfall, the family may need to draw off savings to maintain their current lifestyle. If this amount would clearly wipe out the family’s financial assets, then some immediate decisions and changes with regards to expenses or work income need to quickly happen. Some families find that they need to find more affordable housing or a higher-paying job.
How to help protect your family: Monthly Income ProtectionSM from Washington National
If you’re reading this blog post and wondering how to help protect your family from the tough decisions above, consider Washington National’s new product, Monthly Income Protection.
Monthly Income Protection is a unique group term life insurance product for the worksite. Unlike other traditional policies that pay out in one lump sum, Monthly Income Protection pays out in reliable monthly payments, similar to a monthly paycheck.
Monthly payouts simply make good sense when you consider the fact that the number one reason why Americans purchase life insurance is income replacement.2 Monthly benefits can help surviving beneficiaries cover ongoing household expenses for two, three or five years. The continuation of monthly payments to help replace a wage earner’s paycheck helps give your family time and options—so they can adjust and make decisions in their own time.
In addition to the monthly income benefit, some employers also offer the option of Monthly Income Protection’s additional lump-sum death benefit of $10,000 to $25,000. This lump-sum benefit can be used to help cover final expenses and other immediate final needs.
While the monthly income benefit expires at the end of its term, usually around retirement age, employees will keep their selected amount of lump-sum life insurance—with no more premiums due. The money will be there for your loved ones when you pass away—many years in the future. This unique feature makes Monthly Income Protection a product that provides security during working years and beyond.
We’re here to help!
If you have any questions about Monthly Income Protection (or any of our other products), we’re here for you! Get in touch with your worksite’s Washington National agent, or give us a call at (800) 525-7662.
1Parting, How Much Does the Average Funeral Cost?, https://www.parting.com/blog/how-much-does-theaverage-funeral-cost, January 23, 2018.
2Life Happens and LIMRA, 2019 Insurance Barometer Report, 2019, p. 38
Insurers and their representatives are not permitted by law to offer tax or legal advice. The general and educational information here supports the sales, marketing or service of insurance policies. Based upon individuals’ particular circumstances and objectives, they should seek specific advice from their own qualified and duly-licensed independent tax or legal advisors.