Dear Editor:
I recently saw a magazine ad that said a person should have life insurance worth at least five to seven times his or her annual salary.
I did a couple of quick mental calculations and I thought, “That number sounds about right.” I also thought that most people do not know they may already have that much “life insurance” coverage through Social Security.
Here is what I mean.
Folks who are working and paying into Social Security should know that some of their Social Security taxes go towards survivors insurance. In fact, the value of the survivors insurance people have under Social Security is probably more than the value of their current life insurance through their employers or private policies.
Of course, Social Security survivor benefits are not paid in a lump sum. Social Security survivors benefits are more like an annuity.
For example this year the average monthly benefit payable to a young widow or widower with two children is about $1,900. In the case of this young family, Social Security benefits would be paid to the children until they reach 18 years of age (or marry) or until they reach 19 if they are still in high school full time. And the mother’s or father’s Social Security benefits would continue to be paid until the youngest child reaches age 16. There are other survivors insurance provisions which would apply if any of the children were disabled. All of these benefit payments increase each year along with the cost of living.
Why are survivors benefits and life insurance so valuable to younger workers and their families?
The unfortunate truth is that about one in seven Americans will die before reaching age 67. Under Social Security, an estimated 97 percent of young children and their mothers and fathers are insured for survivors benefits. Benefits can be paid to children and a spouse who is caring for the children if a worker has one and one-half years of work (six Social Security credits) in the three years just before his or her death.
Today, in fact, about seven million of the approximately 47 million people receiving monthly Social Security benefits are survivors of deceased workers. For some families, Social Security survivors benefits can help them maintain their lifestyles in the absence of a wage earner. For others, it can help keep them above the poverty level, and for others, particularly large, low-income families with young children, Social Security benefits have been known to make the difference between staying together as a family or splitting up.
For more information on this important Social Security protection visit www.socialsecurity.gov/survivorplan/index.htm or call 1-800-772-1213 to ask for the publication Survivors Benefits (Publication 05-10084). You also can get a copy of the publication at your local Social Security office. Richard Thayer
Social Security Manager, Jersey City