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.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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
Securities offered through TCM Securities, Inc. 2230 Towne Lake Parkway | Building 800 – Suite 130 | Woodstock, GA 30189 Members FINRA/SIPC |404-889-8733
John Stover is a Registered Representative of and offers securities through TCM Securities, Inc. members FINRA & SIPC
16920 - 2017/8/25
John has devoted his working career to using his talents to serve others through financial services.
The information and materials provided here, whether
supplied by third party websites, marketing materials, newsletters or any form of publication are provided for general
information only. It does not take into account your personal investment objectives, specific investment goals, specific needs
or financial situation and makes no representation and assumes no liability to the accuracy or completeness of the information