Life Insurance - Case Study

Tim and Sue -

Tim and his wife Sue bought their first home which they had been saving hard for, and happily moved in with their two young children.

They decided to look at buying life insurance to cover the mortgage with extra to provide Sue with a regular amount of income while the children were young. Their budget was tight and they weren't sure whether they could afford the $95 per month for the life insurance to cover both of them, but with 2 small children they wanted each other to have certainty and cashflow should something happen.

Then tragedy struck - Tim was killed in a car crash

Did they purchase life insurance? 

Yes -

Sue could never have Tim back but with his life insurance she had immediate cash available for funeral expenses, was able to repay their mortgage and all outstanding debts. Most importantly the family received cash which they were able to use as a regular income, and Sue was able to continue to support her children. 

No -

Sue was devastated at Tim's sudden death but there was worse to come. Who was going to pay the $8,000 funeral expense required immediately? Mortgage payments were due and Sue wasn't currently working and had no income to speak of.

The financial pressure was on and Sue needed to get a job, and put the children in permanent child care. If only they had taken the life insurance cover to provide certainty and cashflow.