What would happen to your loved ones if you (or your spouse) weren’t alive?
That’s not fun to think about and I’m not trying to depress you. But I do want to help you avoid common life insurance mistakes.
If you have a life policy, but only for the major bread winner in the family, it probably isn’t enough. That’s because we tend to underestimate the financial value that a part-time income or stay-at-home parent brings to a family.
When that person is gone, the surviving spouse is burdened with many more responsibilities and expenses, which can be emotionally and financially devastating.
Consider how the survivor would manage the household, care for your children, pay for their education, and meet all your other financial obligations—without additional income. Or how your children would survive if you and your spouse died at the same time?
The vast majority of Americans agree that having enough life insurance is important. But research shows that less than half of U.S. households have life insurance. Unfortunately, 11 million of those households have children under the age of 18 who would suffer.
Common Excuses for Not Buying Life Insurance
If you’re uninsured or under-insured, are you using one of these common excuses?:
- I don’t have time.
- It’s too expensive.
- It’s not a financial priority.
- I don’t understand it.
If you’re procrastinating getting life insurance or increasing your current coverage, think about the legacy you want to leave.
Is taking a half hour (at the most) to get this essential chore off your to-do list worse than leaving your family in potential financial ruin? You’re smarter than that.
You can’t use money as an excuse because term life insurance is really cheap. You can get a $500,000 payout for your family for about $3 a day—even if you’re 50 years old.
Life insurance is a necessity—just like food, clothing, and shelter—so make it a financial priority. You and your family can’t afford not to have ample life insurance.
7 Tips to Buy the Right Life Insurance
Here are 7 tips to find the right life insurance for you and your family:
Tip #1: Comparison shop online.
There are many sites that aggregate offers from the top insurers for one-stop shopping. Some great places to get free life insurance quotes are insuranceQuotes.com and AllState.
Tip #2: Consider features besides price.
Insurance is only as good as the company that stands behind it. So always compare the death benefit, policy premium, and insurer’s rating.
Tip #3: Find out what your employer offers.
Insurance through a group policy may be a good value, but it’s smart to supplement it with a private policy in case you lose your job. You can have multiple life insurance policies, and that may be required to have enough coverage.
Tip #4: Purchase enough coverage.
Most people underestimate the amount of life insurance that’s needed to protect their families. A rule of thumb is to have at least 5 times your annual income—but you may need much more depending on the age and health of your dependents.
Tip #5: Don’t forget to adjust your coverage.
Reevaluate your death benefit on an ongoing basis—especially as you earn more, change jobs, have a child, get married, get divorced, experience a serious illness or disability, begin caring for an aging parent, have a death in the family, or start a business.
Tip #6: Don’t cancel a policy before getting a new one.
If you find a more affordable life insurance policy, be sure the new one is in force before you cancel the old one so there’s no lapse in coverage.
Tip #7: Speak to an agent if you have questions.
It’s free to speak to an insurance agent if you have a question about what type of life insurance policy is right for you or how much you really need.
Use a Legacy Checklist to Get Organized
Instead of risking any confusion, create a simple legacy checklist that lists your most important insurance and financial information. Then send it to your beneficiaries or keep it with other emergency documents, such as a will and healthcare directives. You and your family will be glad you did.