Are you avoiding purchasing life insurance because you think it is too expensive? If so, you are not alone. Many people do not think they can afford life insurance, and thus don’t have as much as they need.
According to a study by LIMRA, 59% of US households do not have life insurance, and even those households with life insurance only have enough to replace three years of income. The average life policy need is about $459,000, but the average policy owned is $126,000, according to AccuQuote. That is underinsurance of roughly $300,000.
Although it depends on your individual circumstances, three years of coverage is likely not enough life insurance. That is because life insurance is designed to provide for loved ones who rely on your income. If you pass away, they may not be able to get back on their feet after just three years.
How do you determine how much life insurance you need? You may want to discuss life insurance with your loved ones to determine what their needs are. This may be an uncomfortable conversation because no one likes to imagine his or her own death. But if someone relies on your income, it is important to ensure that he or she will be cared for if something happens to you.
Plus, getting the life insurance coverage you need may be less expensive than you think. There are different types of life insurance, some more affordable than others. Term life insurance, which pays a benefit to your survivors when you die within a specified period of time, is usually the most affordable type. Whole life insurance, which combines investing with term life insurance, is more expensive.
We can help you decide how much life insurance you need; please reach out to us today.