While it’s uncomfortable to think about our impending deaths, planning for our families’ futures makes it necessary. According to LIMRA’s Life Insurance Barometer Study conducted in 2013, 85 percent of consumers agree that most people need life insurance, yet just 62 percent say they have it.
Unfortunately, the study found that this is because many people overestimate the costs of a life insurance policy. More than 80 percent of consumers attribute their lack of life insurance to affordability. The LIMRA survey found that most Americans believe a 20-year $250,000 term life insurance policy for a healthy 30-something costs $400 a year. The true cost of such a policy is more like $150 annually. In fact, a 50-something smoker could find a $500,000 20-year term life insurance policy for little more than that $400 a year in premiums.
Part of the confusion surrounding the cost of life insurance is due to the fact that too few consumers understand the difference between a term life policy and a whole or permanent life insurance policy. While it is true that a whole life policy can cost significantly more, it also provides more protections and most policies offer a cash building mechanism. These policies are used as investment vehicles in the estate planning process. Even a whole life insurance policy that pays interest to beneficiaries can be more affordable than many assume, however.
While some people may think their loved ones can eke by with Social Security Survivor Benefits, many young families do not have sufficient withholdings throughout their working careers to cover the long term needs of their loved ones should they die suddenly and unexpectedly.
No matter which type of life insurance policy you need, knowing your loved ones have a safety net and will be provided for long after you’re gone is peace of mind on which it’s hard to place a dollar value. Our knowledgeable agents can help you navigate the complexities of life insurance policies.