According to a recent Bankrate Money Pulse survey, nearly 40 percent of all American adults don’t have life insurance. Among those who do have policies, almost half may have insufficient coverage.1
Are you one of the millions of Americans with insufficient life insurance protection? There’s a broad range of reasons why people carry less insurance than they need. However, the fact is that an insufficient coverage amount could lead to financial difficulties for your dependents and loved ones if you unexpectedly pass away.
Below are a few of the common beliefs and myths that keep some people from purchasing additional insurance. Do any of these ideas sound familiar? If so, now may be the time to reassess your life insurance strategy and explore additional coverage options.
You only need life insurance if you have kids.
It’s true that most people buy life insurance to provide protection for their dependents. If you have a spouse or children, life insurance is a great way to provide them with financial security in the event of your death.
However, there are reasons to buy life insurance even if you don’t have dependents. You may have a mortgage, business loans or other obligations that would need to be paid off after you die. You may want to provide funding for your funeral and other final expenses. You might want to leave a legacy for loved ones or a favorite charity. Life insurance can help you achieve a wide range of goals, even if you don’t have dependents.
You should multiply your salary to determine your coverage amount.
There’s a common perception that your life insurance coverage amount should be equal to a multiple of your income, such as two times or five times your salary. While these easy calculations may be simple to understand, they’re not always accurate.
The truth is that your coverage amount should be based on your unique needs and goals. Think about your specific goals for your family and loved ones after your death. Are there debts they would have to pay? Would they struggle to replace your income? Do you want to leave money for college funding or other goals? Estimate these costs and base your coverage on those figures.
You don’t need extra insurance if you have employer-based coverage.
Many employers offer group life insurance coverage as an employee benefit. While this coverage may be a helpful resource, it may not be sufficient to meet your total needs. Many group plans have a cap on coverage, which means the benefit may not be enough to fully support your loved ones.
Also, group plans are tied to employment. They’re usually not portable. What happens if you lose your job and then pass away? Your family could be left without any protection. You may want to utilize employer coverage, but it may not be a replacement for individual protection.
You only need term insurance.
Term insurance is temporary coverage that lasts for a defined period of time. Permanent coverage lasts your entire life, as long as you pay the premiums. In most cases, term policies are much more affordable than comparable permanent policies.
However, this affordability doesn’t mean that term is always the best option. Permanent policies usually have a cash value component that allows you to grow funds on a tax-deferred basis. You could possibly use that money in the future to fund retirement, college or other goals.
Also, a permanent policy means you will always have protection in place. With a term policy, you run the risk that the policy could lapse, leaving you without coverage. If you ever need life insurance in the future, you may find that the premiums are no longer affordable because of your age or health. You can minimize that risk with a permanent policy.
Ready to develop your life insurance protection plan? Let’s talk about it. Contact us at Focus Financial Group. We can help you analyze your needs and create a strategy. Let’s connect soon and start the conversation.
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This material is provided by a third party, and sources believed to be reliable, however, accuracy cannot be guaranteed. The opinions set forth in this video are that of the person speaking in the video, not that of Stover, FFG, or TCM Securities, Inc
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John Stover is a Registered Representative of and offers securities through TCM Securities, Inc. members FINRA & SIPC
16920 - 2017/8/25
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