Life insurance protects what matters most
Life insurance exists to help protect what matters most. According to 81 percent of Americans, their family is their most valuable asset,1 and most people say they want to care for their family the best they can. Life insurance is part of the foundation of a solid, long-term financial plan. Two-thirds of Americans recognize they need life insurance yet many do not have adequate coverage to protect their families.2
Why people buy life insurance
Life insurance is money intended for loved ones upon the death of the insured person. This money is typically used to help pay for funeral costs and outstanding debts left by the deceased. But life insurance can be so much more than that.
Life insurance isn’t a one-size-fits-all product. It can add additional financial security for loved ones by designating funds to help replace the income of a deceased breadwinner. It can be used to help family members offset the mortgage costs associated with your home, so loved ones can continue to enjoy the lifestyle you worked so hard to give them. You can provide funds that will be available when needed to help defray the costs of an education for your children. Or you can leave an inheritance to help a loved one achieve a goal important to them.
Beyond the lifeline your life insurance can provide for grieving loved ones, there’s another gift it can provide to the living — to YOU. Buying life insurance for your family may help enhance your sense of wellbeing, by giving you one less thing to worry about, knowing that you have done your best for those you love.
With all the great reasons for people to buy life insurance, why on earth wouldn’t they?
Some people find it difficult, or at least uncomfortable, to discuss mortality with their loved ones. Others may be overwhelmed at the variety of life insurance options available. There are also a lot of misconceptions about insurance — imagine that!
Let’s take a look at five of the most common misconceptions about life insurance.
LET THE COUNTDOWN BEGIN!
5. I’m single and don’t have dependents, so I don’t need life insurance.
This might make sense on the surface, but married or not, we all have loved ones who will have to take care of business when we’re no longer here. Are you one of the many people with student debt? Do you have a home mortgage? Car payment? What about credit card debt? Do you own a business? In addition to your final expenses, your loved ones may be left to deal with your finances.
4. I’m married, but I’m not the breadwinner, so I don’t need life insurance.
People often think only the family breadwinner needs life insurance protection. However, if a full-time parent is no longer here, the family would have to make other arrangements for childcare, cooking, housecleaning, transportation to and from school and activities, and any other duties that parent had provided.
Remember that ‘dependents’ doesn’t necessarily mean children. If you are caring for elderly parents, or an adult with special needs, you would most likely want to make financial arrangements for their care.
3. Life insurance I get from work life is all I need.
The life insurance you may have through your employer is certainly a great place to start protecting your family. Is it enough? Ask your company’s benefits person for details about that policy, then use the acronym LIFE to help you gauge whether that amount is truly enough for your needs:
L = liabilities like your mortgage and loans
I = income needs to replace what your family would lose when you are not here
F = final expenses
E = education expenses for your children3
2. I have money tucked away for unexpected expenses.
While it’s always a smart move to have money stashed away, an emergency fund is designed to provide for short-term emergencies like a medical bill or car repair. It is not designed to cover final expenses, debts, or the loss of future income that life insurance is designed to cover.3
And here it is — the #1 reason people cite for not buying life insurance:4
1. Life insurance is really expensive.
This misconception is perhaps the most unfortunate of all since life insurance costs far less than most people think. Forty-two percent of Americans estimate the cost to be three times the actual cost; 42 percent of Millennials estimate the cost at more than six times what it actually is!5 Since the cost of life insurance is determined primarily by your age and the state of your health, the longer you procrastinate, the higher your premiums will be.
Protecting your love ones financially when you aren’t there is totally doable. There’s no reason to put it off any longer. Contact a licensed insurance professional to help you choose the right type and amount of life insurance to suit your needs, your financial goals, and your budget.
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Life Happens, Protecting What Matters Most: Your Loved Ones (May 14, 2020)
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Life Happens, 2019 Insurance Barometer Study: Nearly Half of Americans More Likely to Buy Simplified Underwritten Life Insurance (May 14, 2020)
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Kiplinger, 5 Myths That Could Have You Walking a Financial Tightrope Without a Safety Net (May 15, 2020)
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Life Happens, 6 Reasons People Don’t Buy Life Insurance (and Why They’re Wrong) (June 17, 2020)
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LIMRA, To Help Get More Millennials Insured (July 6, 2022)
Categories: Insurance, Life Insurance