About half of the adults in the US own life insurance. The other half doesn’t. Some don’t need it. And others who arguably DO need it… don’t WANT it. It’s a free country. There’s obviously no law that says we must care about our families, but the fact is… most of us DO!
So why do only half of us own life insurance (other than a token tiny policy we may have at work for free)?
I’ve been doing this for over 32 years. I’ve listened carefully to our prospects and customers. It seems to me that many folks procrastinate the purchase of life insurance because they’re simply not sure…about three things. And all three are important.
Folks aren’t sure about how much coverage they need or want.
It’s math, and some folks just hate math. Rest assured that it’s really not all that complicated. If you’re a do-it-yourselfer, there are lots of online tools and calculators to help you. Or, for free (yes FREE), you can enlist the help of a professional (like the folks at AccuQuote) who will gladly help guide you to determine the right amount. These professionals, whether it’s us or anyone else, of course, hope that, if they’re helpful, that you’ll choose to buy your policy through them. There’s never any obligation to buy, but if you do, they’ll be compensation through a commission (paid by the life insurance company you ultimately choose) for their efforts!
Some additional thoughts and a cool video about the How Much Coverage question:
If someone were to write you a check for the total amount of life insurance you own would you agree to work the rest of your life for no pay? If the answer is yes, you’re good to go… you have enough coverage. If the answer is “no”, you’ve either done the math in your head, or you instinctively know that your existing coverage doesn’t, in any way, resemble the economic value of the rest of your life’s work.
Simple arithmetic could be done by multiplying what you earn, times the number of years you intend to work until retirement. Even without building in any inflation or likely salary increases, add it up and you’ll see… between now and retirement, you’re probably gonna earn a lot of money. And that’s what your family would essentially be losing if you die tomorrow. I know, you don’t plan to die tomorrow, or any time soon. Most people don’t. But some of us will. I’m sure you know folks that have. And they didn’t expect to either! Life insurance cannot replace a father, mother, wife, or husband. But it can, if you let it, replace the economic value that is lost when someone dies.
What Kind of Life Insurance Should I Buy?
What kind of life insurance is best for me? Term? 10, 20, 30 years? Whole Life? Universal Life? ROP? Click on the video to learn more, or keep reading.
There are lots of choices and, for many folks, that can be overwhelming. One statistic that was shared by LIMRA (which is the life insurance industry’s research arm) is that when polled, people think that life insurance costs between 3 and 7 times a much as it really does cost. So you might be pleasantly surprised at how cheap it is today. So… is the cheapest product the right product to buy? Again, after having done this for 32 years, and servicing over 200,000 clients, I’ve heard and seen a lot. What KIND of life insurance fits best for you will depend on how long you want the coverage to remain in force. If the need is temporary, a temporary solution can work just fine. Temporary insurance, in the life insurance world is commonly referred to as TERM life insurance. It’s very inexpensive, and available with level guaranteed premiums of 1 -40 years. These policies are very inexpensive.
Interestingly though, after owning life insurance for many years, most folks end up wanting to keep the coverage as they may have grown accustomed to the peace of mind in knowing that when they die, their legacy is augmented with some cash for their loved ones. This money can be used to replace lost income if you die during your working years. But even in retirement, the funds can be used to provide a cushion for your spouse or even for adult children to help start a business, pay off student loans, a down payment on a house, or perhaps for educating grandchildren. The point is, the longer the coverage lasts, the less likely you are to be disappointed with a policy that ends before you want it to end! If you do ultimately decide to go with a term insurance policy, you may want to err in favor of a longer term (20-40 guaranteed level premiums), versus a shorter term (10-15 years). Longer terms cost a little more, but they’re still really cheap compared to permanent plans. If you’re “done” with the policy before the level term period ends, no worries… just stop paying for it…you can leave whenever you want. But as long as you pay your scheduled premium each year or each month, the insurance company can’t kick you out or raise your premiums before the guarantee period ends… which puts YOU in the driver’s seat.
If you want to guarantee the coverage will be there when you die, whether that’s tomorrow or at age 113, you’ll need to look at permanent coverage. Term policies simply won’t work that long. Permanent plans can be designed to have guaranteed premiums for life. If designed efficiently, they can also be very affordable.
Who Should I Trust To Handle My Life Insurance?
The last question you may be wondering about is “Who should I trust to handle my life insurance?” In today’s world of ubiquity, it’s not hard to go on the web and find out which insurance companies offer the best prices in a given category. There are HUGE differences in price for products in the same category. For example, 20-year term prices for a $750,000 face amount on a 45-year old healthy male non-smoker (preferred plus risk class) range from as little as $71 a month to as much as $153 a month. Over the 20 year term, that’s a difference of almost $20,000! I think you’ll agree that it would be silly to overpay by that much! What you may not know that if you decide to buy a policy issued by “Company A”, from a pricing standpoint, the price will be the same no matter which agent you select to handle your application. Agents, of course, all want your business. And they may blather on about why they’re better than the other agent. So how should you choose?
My advice is simple: YOU SHOULD BUY YOUR LIFE INSURANCE FROM THE PERSON THAT GIVES YOU THE BEST ADVICE. If that’s us, we hope you’ll trust us to handle your application. It’s how we make our living. If, however, you get better advice from another agent, then you should buy your policy from them. Remember, once you pick a product and insurance company, the price will be the same from agent to agent (again, assuming the product is the same) so the agent you select should EARN your trust by providing you with the best advice.
Keep Reading and Learn How to Save Money for Life
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