For over 250 years, life insurance has been an important tool used by American families to protect their loved ones. Nevertheless, there are still millions of families, especially Hispanic families, that are still trying to determine if buying life insurance is worth it. The answer to that question is a resolute “yes.” Ask any family that has experienced the unexpected death of a loved one and you’ll find that none regret the fact that they had life insurance at that moment.

How life insurance works

Remember that life insurance is a special type of contract. It promises to pay money (called a death benefit) to one or more individuals if another person dies. The person receiving the money is called the beneficiary and the person covered in case of death is called the insured person. A beneficiary receives the death benefit, based on what’s outlined in the contract, if the insured person dies during the time the life insurance policy is active. Assuming there are no unusual circumstances and that the fees for the insurance policy (called premiums) are up to date, the money is usually paid quickly and in full to the beneficiaries. Unlike investment income, death benefits are 100 percent tax free.

Do I really need life insurance? If so, how much?

When the question of life insurance ownership comes up, many Hispanics ask themselves the questions below.  If you answer YES to at least one of the following questions then you need life insurance:

• Do you have a spouse?
• Do you have children?
• Do you have any debt?
• Do you have grandparents, parents or siblings that you support financially?
• Even if no one depends on you financially, do you want to leave money aside to cover your funeral expenses?
• Do you want to leave money to your heirs or to your favorite charity, organization or school when you die?

It’s hard to find people that don’t answer yes to at least one of these questions! Once you determine that you need life insurance, the question that follows is how much do you really need? The amount depends on your income, incurred debt, your number of dependents, how long they will depend on you and the dollar amount you want to leave to your heirs.  A useful online source that can help you determine the right amount of coverage is www.lifehappens.org, where you will find clear, easy to use information and the Life Insurance Needs Calculator (www.lifehappens.org/howmuch) that can help determine about how much protection you should purchase. When selecting your life insurance policy, keep in mind to purchase the right amount. Avoid purchasing less than what you really need because it won’t offer enough protection to your beneficiaries. Likewise, avoid purchasing excessive coverage so you’re not unnecessarily paying a higher premium.

Can anyone be a beneficiary? Can anyone buy life insurance?

The good news is that anyone can be named a beneficiary regardless of where they live or their immigration status. If you are a U.S. resident or citizen and you want to buy an insurance policy that will pay your family in Mexico in case you die, there is absolutely no problem doing so. You have the right to name your beneficiaries.  But be sure to tell them!  If something does happen to you it could be difficult to locate your family if they are in a foreign country. Give your beneficiaries the name of the insurance company, the policy number and the contact information of the insurance company.

When it comes to insuring an undocumented person, that process isn’t so easy. If you tell the truth on the life insurance application form and indicate that you are in the United States illegally, then it is almost certain your application will be rejected. If you lie on your application form or use false information, then once it is discovered (as it likely will be) the insurance company can opt to not pay your beneficiaries.

Don’t delay this important decision

The purchase of life insurance is the first step that you should take towards protecting your family financially. It’s an accessible financial instrument that can be tailored to almost anyone’s needs.  Don’t delay and visit www.lifehappens.org today to learn more about life insurance and the role it should play in your – and your family’s financial future.