There are many known reasons to buy life insurance. Some of the top reasons are to cover burial and other final expenses, transfer wealth or leave inheritance, to replace lost income or to help pay off the mortgage. These reasons are very real goals most people have when making the decision to purchase life insurance. However, about 40% of Americans do not own any life insurance. Well, why wouldn’t you buy life insurance?
A recent study by LIMRA, an organization who inspires to help people take personal financial responsibility to own life insurance, shows that the top reason people do not purchase some or more life insurance is because it is too expensive. Consumers overall estimated that the average cost of life insurance was around $400 annually for a $250,000 Term policy for a healthy 30-year-old. 1 in 4 thought it would cost $1,000 per year. However, a quick check with one of our life insurance carriers shows that a healthy 30-year-old male can by the same policy for $178 and a healthy 30-year-old female can buy the same policy for $150.
Another major reason people don’t buy life insurance is because they have other financial priorities right now. This is a very pragmatic response. We all have bills and ongoing expenses as well as savings and retirement goals that seem to take precedent over buying life insurance. Let’s look at this from another angle. How would the people that depend on you, spouse, children, parents, etc., be able to pay the bills expenses and save for future goals if you were no longer around to provide a source of income? For most Americans, this would paint a bleak picture for dependents. Life insurance can be used to prevent this tragedy from occurring. You can buy the protection you need so that even if something happens to you, your dependents will be able to still rely on you financially.
The last major reason that we’ll discuss is that people believe they have as much as they need. We discussed that 40% of Americans don’t have any life insurance coverage at all. However, nearly one third of those that have life insurance only own group life insurance through their employer. These policies are typically a small multiple of your salary if even that much. Further, if you leave that job, you lose the life insurance coverage.
How much life insurance coverage you need can be a tough topic to tackle since it depends entirely on the person buying life insurance, their goals and their budget. If you are a typical family looking to provide coverage for a spouse and kids until the kids are out of the home, you should start the conversation at around $250,000. Your needs may be more or less than this but it's a great place to start. $250,000 will pay off most people's mortgages, provide money for immediate needs (bills, funeral, etc.) and maybe some left over for future goals. However, if you want to send kids to college or help your surviving spouse with retirement, $250,000 might not even come close to your needs. We have a few calculators you can use to help get an idea of what you need.
Life insurance can be a complicated topic to tackle. However, you don’t have to do it alone. No matter where you are in your journey through life, call the Frederick Agency at 419-732-3171 and we’ll help you protect the one’s you love most!
Some statistics obtained from https://www.lifehappens.org/industry-resources/agent/barometer2016/