What are you doing for that special someone in your life this Valentine’s Day? Flowers and a box of candy? Dinner and a movie? How about a life insurance policy?
While that probably won’t do much to set the mood for romance, the promise of lifetime financial security is bound to win you some brownie points with your loved ones. In fact, it may be the most thoughtful gift you could give.
What would happen to those who depend on you if you suddenly die? Would they be able to continue paying the bills and living expenses? Pay off debt? Pay for your kids’ education? Continue living the life they’re accustomed to? These are questions that need to be answered to make sure your loved ones are protected after you’re gone.
Insure Your Love.
Since February is the month of love, the nonprofit Life Happens is once again sponsoring its annual “Insure Your Love” campaign to help raise awareness about the importance of carrying life insurance. And given the statistics, it’s clear this campaign is vital.
According to the 2014 Insurance Barometer Study by Life Happens and the insurance industry research group LIMRA, about 65 percent of consumers admit they need life insurance, and roughly 31 percent believe they’d feel the financial impact from a primary wage earner’s death within a month of passing.
And yet, 30 percent of U.S. households – 95 million adults – carry no life insurance at all.
That’s a heartbreaking disconnect. Those families are doing without the financial security life insurance would provide, even though they know they need it. So why the disconnect? The main reason is the perceived cost – and sadly, that perception is usually wrong. According to the Barometer Study, more than 80 percent of Americans actually overestimate the cost of life insurance. That means they’re needlessly putting their loved ones at risk.
How do you know how much life insurance you need?
That’s another stickler for many people, but it’s not that difficult. A common rule of thumb is five to ten times your annual salary. But everybody’s situation is different, so you should conduct a needs analysis to evaluate your family’s financial obligations. Some things to consider:
- Debt. Include funeral expenses, mortgage, credit cards, student loans and any other outstanding debt.
- Family income. You want your loved ones to be able to maintain the standard of living they’re used to. Consider your age, health, retirement and Social Security benefits and your spouse’s earning potential to figure out how much that will take.
- Estate taxes. Estate taxes and other expenses can take a serious bite out of the amount you pass on to your loved ones. Life insurance can help you establish liquidity at death to take care of those expenses.
- Education expenses for your children’s college education.
- Available resources. If your current assets and retirement plan’s death benefits aren’t enough to cover your family’s financial needs when you’re gone, life insurance is a great way to fund the difference.
Where to turn for help:
To further research your life insurance needs, Life Happens offers an interactive product selector and calculator. It’s also a good idea to explore the life insurance benefits available through your work. The easiest option of all? Let the life insurance experts at Higginbotham Insurance answer your questions and help you choose the ideal coverage. As an independent agency, we can compare coverage options from several sources, and we’ll help you with every step of the process.