I've seen it happen three times to people I know.

A seemingly healthy man in his 50s dropped dead of a heart attack, leaving a stay-at-home wife grieving and financially insecure. Of his $20,000 life insurance, little remained after paying for the funeral and settling debts.

A 47-year-old man spent his six-figure salary so fast he had no savings to speak of and a mere $30,000 in life insurance. (Why worry, he would say, things always turn out fine). They didn't for his wife and two college-age daughters who had to beg acquaintances for help after he died in a car accident.

A third man, also married, retired in his 60s with only modest savings and a pension to supplement the couple's Social Security benefits, which were based entirely on his work record.

This man, in exchange for a slightly larger benefit, chose to have his monthly pension stop when he died rather than have his wife continue to receive payments. He did so even though he had no life insurance and was uninsurable at this point. When the man died of cancer, the financially strapped wife was forced to sell the house and move in with her son and daughter-in-law.

These men loved their families in life, but they failed them in death. Out of inertia, ignorance or not wanting to think about it, they committed a most selfish act by failing to plan for what would happen when they died.

It's not just the men who need to plan. The woman is a major (or only) breadwinner in many families, and even the death of a stay-at-home wife can create burdensome housekeeping and child-care expenses.

Americans seem to understand this but few do much about it. Research by the National Association of Insurance Commissioners shows that nearly two-thirds of young families believe it is "very important" for both spouses to have life insurance, but most of the time neither one does.

Young singles with no dependents have less need for life insurance. But many should still consider it because they could obtain lower rates without worrying about qualifying medically for a policy later on. A survey by NAIC, an organization of state insurance regulators, found that only 35 percent of young singles have life insurance and just 28 percent express high confidence in knowing the difference between the two basic types, term and permanent.

"While many adults with dependent children living at home know they need life insurance to protect their families, not all have it, and few young singles even take the time to evaluate their options," said Alessandro A. Iuppa, NAIC president.

In addition, only 40 percent of Americans with life insurance take the time to review their policies every year.

If we haven't done it before, before paying the renewal premium we should update our policies to reflect any major changes in our lives, such as marriage, the birth of a child, divorce or the death of a spouse, said Catherine J. Weatherford, CEO of NAIC.

To help consumers, the NAIC has created "Insure U," a Web site (www.insureUonline.org) with guidelines on whether and when to buy, increase or reduce life insurance at different stages in life.

For example:

Start by considering how many people depend financially on you, what their major expenses are likely to be and whether you are likely to leave them with substantial debts or taxes to pay on your estate.

>Evaluate the two main types of life insurance, term and permanent. Term pays a death benefit if you die within a specified period or term, such as one to 20 years. Permanent life insurance (which comes in many varieties such as whole life, universal life and variable life) includes a death benefit and the ability to build up cash value.

>Young singles who want to make sure they can get life insurance later on should consider a term policy guaranteed to be renewable. They may also consider a term policy with a conversion option, which enables them to switch to a cash-value policy.

>Families should consider the probable costs of their children's college education when determining how much life insurance they need.

>Empty nesters and seniors should evaluate whether they can reduce their coverage based on such factors as whether their spouse is alive, their home is paid off and their children and/or grandchildren are financially independent.

>And all consumers should check with their state insurance department to make sure the company offering a policy is legitimate, solvent and authorized to do business in their state, Weatherford said.

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Humberto Cruz:
The Savings Game

Humberto Cruz can be reached at AskHumberto@aol.com or c/o Tribune Media Services, 2225 Kenmore Ave., Buffalo, NY 14207. Personal replies are not possible.

Copyright 2006 Los Angeles Times