Like most Americans, you probably have insurance on your home, your automobile, and even on your iPhone. This is great, as should something happen to any one of these high-priced commodities, you'll be taken care of. Yet alarmingly, when it comes to insuring one's life, Americans tend to be far more lax in their approach to ensuring that their loved ones are taken care of should the unthinkable happen.
Perhaps that's just the reason
that we are so collectively underinsured: Who wants to think about their
own mortality? While it may
not be a pleasant thought, you know it's an inevitability. And while it's not
inevitable that your house may burn or you'll be in a car accident, the time
comes for us us all — no matter how prepared we may be.
And the statistics support the
fact that we are not nearly as prepared as we should be. According to LIMRA1
(formerly known as the Life Insurance Marketing and Research Association), a
full third of Americans have no life insurance at all, and of those that do,
their coverage amounts to less than four times their yearly income. However,
according to the LIFE Foundation, a nonprofit organization dedicated to
assisting consumers to make smart insurance decisions to protect their families'
financial futures, most insurance professionals agree that you need at least 10
times your annual income to ensure your family is comfortable now and into the
future.
So, before you decide that a
$250,000 life insurance policy should be plenty of money for your family to
survive on should you die unexpectedly, the LIFE Foundation encourages you take
the following into consideration when determining if you have enough coverage:
Your family's immediate needs, such as:
● Health care costs
● Funeral and burial costs
● The need to take time off
from work or school to grieve
Everyday or ongoing needs, such as:
● The mortgage or rent
● Car payments
● Traditional cost-of-living
expenses such as heating and cooling, cable, Internet and food
● Paying off credit card or
other debts
Future needs, such as:
● Your childrens' college
education
● Your surviving spouse's
retirement needs
● Paying for weddings or
celebrating the birth of grandchildren
Your family's existing resources, such as:
● Your collective savings
● A spouse's income
● Any life insurance you might
already own
● Investments
After adding up all of these
costs and available resources, if there is a gap between the sum at which you
arrive and what would equal 10 times your annual income, it's time to get more
insurance. And with a New Year upon us, there is no better time to reconsider
your life insurance needs. What's more, since every year tends to brings
change, no matter how large or small, if you've experienced any of the
following life changes, be sure to mention them to your insurance agent or
advisor as you review your insurance needs.
A list of common life changes
to review with your insurance professional:
● The birth or adoption of
children or grandchildren
● Marriage, separations or
divorce
● Changes in you or your
spouse's employment situation
● The purchase of a new home,
or the unfortunate loss of a home
● Refinancing a home or
exploring reverse mortgages
● Serious changes in your
health or that of your spouse
● The long-term care needs of
family members
● The need to provide
financial, health care, or other assistance to a parent
● Your current
retirement-savings status
● Receiving an inheritance or
a financial gift
● Any new tax or
estate-planning concerns
With all this in mind, when
you meet with your insurance professional, you'll be better prepared to
confidently address your life
insurance needs while providing him or her with the facts needed to
determine how much and what
kind of coverage would be best for you... and for your family.
1
http://www.limra.com/newscenter/newsarchive/archivedetails.aspx?prid=145
This
material was prepared for Wealth Design Group, LLC by Financial Social Media.
