From Christine DeCorte & MassMutual Financial Group, 702.371.1000

Covering Your Bases with Life Insurance

Now at the dawn of the 21st century, there is more than a new millennium to worry about. Over the last two decades, inflation has outpaced wage increases, creating a decline in the purchasing power of your dollars. As a result, you need more dollars each year to purchase the same items. If inflationary trends continue, your financial and estate plan probably needs to take into consideration that some of your priorities may be subject to inflationary pressures. Here’s a closer look at three estate planning needs commonly affected by inflation:

1) Spousal income replacement. In recent decades, dual income households seem to dot the landscape. For some, higher levels of household income have permitted higher lifestyles. For others, two incomes are required just to make ends meet. If your budget and lifestyle are dependent on two incomes, you should review your life insurance coverage. You, your spouse, and family may be in financial jeopardy if your insurance plan has not been recently updated.

2) Purchasing new home with a mortgage. From 2001 to 2003, the median sales price of existing privately-owned one-family houses sold in the United States increased from $147,800 to $170,000. And, according to the National Association of Realtors Web site (www.realtor.org), the median price of an existing single-family home as of June 2004 was $183,600.

Today, many homes are often purchased with a substantial mortgage. If you or your spouse suffered an untimely death, would your current life insurance be able to cover your mortgage indebtedness? It’s important to make sure your life insurance policy’s death benefit provides sufficient funds to accomplish your goals—protecting your family’s lifestyle.

3) College education costs. If you have college education plans for your children, you may be concerned about the rising costs of higher education. At some prestigious private colleges and universities, the total of one year’s tuition, fees and room and board can surpass $30,000 to $40,000 in 2004. That translates into a final four-year cost for a bachelor’s degree of well over $100,000. Putting money aside for your child’s education requires a long-term financial commitment and a disciplined approach to saving. However, it also requires a contingency plan in the event of an untimely death. For this reason, you may want to include all or part of the projected education costs in your insurance plan.

Keep in mind that life insurance planning doesn’t end with these three scenarios. In fact, you may have additional goals you want to cover in the event you or your spouse suffer an untimely death. It is therefore important that your life insurance coverage is adjusted for inflation to ensure your wishes will be fulfilled in the future.

C: 059519-000 07/04