Do you Have Enough Life Insurance?


Are you like more than half of the US population and don’t carry enough life insurance? Do you even carry life insurance? Many people either rely on their group policies or have no coverage. If your financial plan doesn’t include life insurance, you aren’t protecting you and your family well enough.

How Would your Family Survive?

Think about the worst happening. You die tomorrow. Where does that leave your family? If you are the breadwinner or your family relies on your income, where would they get money for the mortgage, utilities, insurance, medical bills, food, clothing, and the daily cost of living?

If you contribute 100% of the family’s needs or even a percentage of it, think about whether your family can survive without it. If they can’t, you need life insurance.

Many people mistakenly think life insurance is too expensive. But according to S&P Global, the average life insurance plan costs $44 per month. Not everyone will qualify for rates that low, but you can see how affordable rates may be. The earlier you apply for life insurance, the less it will cost.

How Much do you Need?

If you don’t have life insurance or only have a group policy, determine how much you need. Think about how long you want to set your family members up for and how much they’ll need per year. For example, if it costs $60,000 for ‘regular bills’ each year plus the cost of living and you want your family to have at least five years of living covered, you’ll need $720,000 plus the cost of living.

If you’re unsure, consider using a life insurance calculator to help you look at all factors.

 

What Type of Life Insurance do you Need?

Many people get overwhelmed by the types of life insurance, which causes them to ignore it. While there are many types, the two main categories are term and whole life.

  • Term life insurance provides coverage for a specific term, usually 5 to 30 years. If you die within that time, your beneficiaries receive the full benefit. If you outlive the policy, you may renew it at a higher rate (based on your age and health), buy a new policy, or convert it to a whole life policy.
  • Whole life insurance provides coverage for your entire life. It has a death benefit like term life insurance, but it also grows a cash value. You may borrow from the cash value throughout your life. If you don’t repay it, you’ll reduce your total death benefit, but if you do repay it (with interest), the death benefit remains the same.

If you have group life insurance coverage, how much does it cover? Most group life insurance policies are free for employees, but cover up to $50,000, which may not even cover one year of your loved one’s expenses.

Consider your financial status and whether you should include life insurance in it. The younger you are when you buy a policy, the less it costs. If you didn’t buy life insurance in your ‘younger’ years, still consider buying a policy, just shop around to find the best coverage at the most affordable price.  

 

Disclosure: This article is not to be taken as investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal, insurance, or financial professional. The observations made in external articles are independent of Wimple and should not be read as financial recommendations.