Studies have shown that while women indicate they understand how life insurance works; few are able to quantify its economic value. Put another way, most women do not understand the real value of life insurance within their financial plan.

Why Life Insurance?

Life insurance can provide the additional security needed to ensure your family is protected. Unlike most other assets or investments, the death benefit on a life insurance product is fully guaranteed as long as the premiums are satisfied. Life insurance is one of the best funding products you can own to ensure a specific amount of cash will be available when your family needs it the most. Additionally, the death benefit proceeds flow directly to the named beneficiaries without going through the probate process, making this an efficient tool to pass assets on to your heirs.

Three things you should know about life insurance

Life insurance premiums continue to decrease — about three-fourths of Americans think life insurance is too expensive to fit into their family budget, but the reality is that’s not the case. In 2008, the Insurance Information Institute estimates that term insurance pre­miums will drop approximately one percent, continuing a long trend of declining life insurance rates. Term life insurance rates are generally half of what they were a decade ago, due in part to increases in average life expec­tancy. The cost of permanent life insurance products has declined as well.

New combination products offer you more options – Thanks to recent chang­es to the tax laws, you can now purchase hybrid products that combine the benefits of life and long-term care insurance, a welcome development for an aging population. Consumers have always been able to accumulate cash values in their per­manent life insurance policies on a tax-deferred basis. Now you can withdraw money tax-free from the cash-value por­tion of your policies to pay for long-term-care services.

Changes in under­writing make obtaining life insur­ance easier – You may think high cholesterol, a job that takes you to dangerous countries or even a past bout with cancer will prevent you from qualifying for life insurance at reasonable rates. This is not always the case. Different companies will assess certain risk factors differ­ently. For instance, some companies may offer very competitive rates for smokers but won’t be competitive when it comes to insuring people with high cholesterol.

Q. How much life insurance do you need?

The answer is really dependent on two things: how much will be needed at death to meet immediate obligations, and how much future income is needed to sustain your household and protect your family. While the first can be easy to calculate, the second is where most people have difficulty.

It would not be an overstatement to say that both women and men seriously underestimate the monetary worth of their contributions to the household. Here is an exercise that may help you determine if you are underinsured: Is the amount of coverage that you currently have equal to the maximum amount you would seek in a wrongful death settlement?