Life is unpredictable, but you and your loved ones can be prepared for the inevitable regardless of the “hows” or “whys”. Life insurance is increasingly important to protect the financial security of dependents, yet there are so many who have little or no coverage.
According to the most recent 2019 Insurance Barometer Study1 conducted by Life Happens and LIMRA, 6% of American households, approximately 8 million, purchase an Individual Life Insurance policy. Additionally, 10% of households, approximately 13 million, get a minimum of one quote and 13% of households, approximately 17 million, “seriously shop” for a policy within a 24-month time period.1
When it comes to deciding on coverage, there are three major questions buyers need to answer:
- Why should I get coverage?
- How much coverage should I get?
- How much coverage can I afford?
Life Insurance is not about protecting your life or well-being as most, if not all, other types of insurances are. It is a form of coverage protecting those closest to you from facing insurmountable debt caused by your final expenses or other financial hardships without your income.
Once you decide to take that first step toward getting a policy, you will need to calculate how much coverage you need. There are many factors to take into consideration when deciding on a policy amount, such as how much your family will need to maintain their current lifestyle without your income, as well as funeral costs and other final expenses. These may include medical bills or nursing home fees that will fall upon the family should you pass on prematurely. According to the most recent study released by the National Funeral Director Association (NFDA), the average cost of a funeral in 2017 was $7,360.00.2 This cost and all other final expenses (student or other loans, medical care, etc.) will fall upon your loved ones to afford.
It is also important to take into account any debt you currently carry, particularly if you have a cosigner. According to the article “There’s another reason to get life insurance most people don't think of: to pay your student loans if you die” by writer Clint Proctor for Business Insider3, life insurance policies may be a good buffer for student loan borrowers with cosigners. The article writes: “If your parents co-signed on your student loans, you may want to consider making them a beneficiary of a life insurance policy. The policy doesn't have to be large. It just needs to be big enough to cover your student loan obligations.” While loans may be easier to plan for ahead of time, it is not possible to predict an exact cost of medical care should you fall ill. However, it is possible to prepare for these potential costs with your life insurance policy by selecting an amount high enough to buffer these expenses. To learn more about calculating your life insurance need, take advantage of this online life insurance calculator from Life Happens.
Your New York State Bar Association Insurance Program is here to help you choose the right life insurance coverage plan. For policy information, to get a quote or speak with a representative, please visit us online here or call 1-800-727-7770.
- 2019 Insurance Barometer Study. Life Happens and LIMRA. Retrieved from https://lifehappens.org/
- NFDA 2017 General Price List Survey (2017). National Funeral Directors Association. Brookfield, WI. Retrieved from http://www.nfda.org/news/statistics
- Proctor, C. (2019, August 21). There's another reason to get life insurance most people don't think of: to pay your student loans if you die. Retrieved from https://www.businessinsider.com/life-insurance-can-cover-your-student-loans-if-you-die-2019-8