Use life insurance to protect your wealth: find the right policy to ensure security at any age.

Author:Hocker, Cliff

AS A SELF-EMPLOYED CONTRACTOR IN HIS 30s, Don Wachtel worried about how his Greenport, New York, family would survive if he became incapacitated or died. He had a wife, Tonia, who worked as a certified nurse's aide, and two daughters. Don shared his concerns with a close friend who happened to be an insurance agent. In turn, Don's friend suggested that they have a detailed conversation about life insurance. "This was way before he was diagnosed with a brain tumor," says Tonia.

The Wachtels bought a life insurance policy that included an accelerated death rider, which allows families of terminally ill policyholders to receive part of the benefit before the policyholder's death. "When we first got insurance, we were afraid that we wouldn't be able to afford it," Tonia reflects. "Turns out, the insurance wasn't that expensive." The couple paid $280 every three months for a $500,000 policy.

After Don fell ill, the policy's accelerated death rider enabled Tonia to take an eight-month leave of absence from work to spend time with her husband as he neared the end of his life. He died in July 2011. Tonia is now 40 and her daughters, Alexis and Paige, are 19 and 12. "With the insurance I was able to keep the business going for a while. [She later closed it.] It allowed me to pay my mortgage and other bills, but most importantly, I was able to have a little healing time with my girls after their father passed."

As the Wachtels' story illustrates, we all need to prepare for life's unknowns. Being financially prepared for a breadwinner's death, among other calamities, saves families from the added grief of losing necessary resources to maintain their standard of living. Life insurance continues to be a powerful tool for safeguarding one's income and wealth.

Life Insurance Through the Ages

Life insurance is critical at any age. In data from LIMRA, a worldwide research organization that works with the insurance and financial services industries, 37% of Generation Y (generally, those born between 1981 and 1999) African Americans surveyed say they own individual life insurance, lower than either black Gen Xers or baby boomers. "Yet, the group most likely to buy life insurance in the next 12 months is Gen Y at 47%, the highest among the three generations," says Nilufer Ahmed, Ph.D., senior research director for insurance markets at LIMRA. (See chart)

Antaun Barnett, a life product consultant at New York Life, agrees. "A prudent decision would be to lock in...

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