Ensure your Legacy with Life Insurance
Too many people are taking an unnecessary risk by not protecting their loved one with life insurance.
That's the message from the non-profit consumer support organization Life Happens to mark September's 2018 Life Insurance Awareness Month.
And it's not just a glib statement that's trying to sell you life insurance. There's a genuine concern about how survivors have to struggle after the main wage-earner in a family dies.
According to a survey by Life Happens and the global insurance research group LIMRA, one out of every three households would have immediate trouble paying living expenses if the main earner died.
It's truly amazing that around 95 million adult Americans have no life insurance, even though many of them recognize that they need life coverage, Sometimes, they don’t think they can afford it, when the truth is that some types of life insurance are incredibly cheap, even costing less than fifty cents a day.
Aldrich Taylor is among those agents and insurers in Southern California supporting this event, which is aimed at making Americans more savvy about life insurance and its importance for their financial security.
Let's take a closer look at life insurance, by answering a few questions we often encounter here in Southern California -- like "what is term life insurance?"
What Does Life Insurance Cover?
In very simple terms, it's an insurance policy that pays out an agreed sum to your beneficiaries when you die or if you die within a specified period.
What Are The Main Types of Life Insurance?
Term life insurance , which, as its name suggests, provides coverage for a fixed number of years, usually 10, 20 or 30 years. If the term expires before you do, there's no payout. The main advantage of term coverage is its extremely low cost for a fairly big payout. This makes it very useful for young and growing families with major expenses like mortgages, college and other costs, who are on a tight budget. For example a 20- or 30-year term policy would probably be sufficient to cover the most expensive time for a family.
There are two main types of term insurance -- level term where the death benefit stays the same throughout the period, and decreasing term where the benefit drops each year during the period.
Permanent life insurance guarantees to pay out the insured sum to your beneficiaries when you die, even if you live to 110 (and provided you continue to make the premium payments!). There are three main types of permanent coverage:
- Whole or ordinary life insurance -- the simplest and most common type of policy, which includes a death benefit and a savings account.
- Universal or adjustable life insurance. This allows you to adjust the death benefit while the policy is in force, which means you can increase coverage as your budget improves or as your survivor's needs increase.
- Variable life insurance. This includes both a death benefit and a savings account that can be used for stock market and other speculative investments. However, if your investments don’t do well, your policy benefit may also decrease.
Permanent life policies, especially those with savings accounts attached, can sometimes be used as collateral when trying to raise finance.
How Much Life Insurance Can I Get?
You can insure your life for almost any amount starting from $10,000 up to $1 million or more.
How Much Life Insurance Do I Need?
You need to work this out based on things like how many people depend on your income, how much they would need for living expenses and for how long, whether you have debts that will need to be repaid, what other assets will be left to your beneficiaries, and whether you want to leave money as a legacy to a worthy cause you support.
Experienced insurance agents like Aldrich Taylor make these calculations straightforward. They can do all the work with specialist data and calculators.
How Much Does Life Insurance Cost?
That depends on the type of policy you have. Term life insurance (see above) is obviously cheaper because it doesn’t guarantee to pay out unless you die within the term.
The rate also depends on your age when you take out the policy, your health, whether you smoke or have smoked, and any other risk factors that insurance companies weigh into their calculations -- such as your job.
For a healthy young person buying a 10-year term insurance policy, the monthly cost for $100,000 of cover could be as little as $10.
Because women have a longer life expectancy than men, their insurance premiums are generally lower.
Not all insurance companies charge the same amount for the same level of coverage. That's why it's important to have an experienced agent who works with them all, to identify the most competitive rates.
Who Needs Life Insurance? Do I Need It If I’m Single or Have No Dependents?
With very few exceptions, we all should have life insurance.
It's a bit of a myth to think you don’t need it just because you don’t have dependents. For instance, you may have financial obligations like car loans or other debt that will need to be repaid.
There would also be funeral expenses.
And you may want to leave a gift or legacy. A modest permanent life insurance provides the means for how to ensure your legacy.
What Should Do If I Don't Have Life Insurance of I'm Underinsured?
Speak to an experienced agent like Aldrich Taylor. Consultations are free and without any obligation, so you can explore your options without spending a cent!
You can do this at any time but with September being Life Insurance Awareness Month (LIAM), it's a good time to make a start down this important financial path.
The theme for this year's campaign is "Journey to Financial Fitness" and the organizers are calling on all Americans to commit to making this journey for the sake of their own security and that of their family.
And if you'd like to know more about this year's awareness month and why life insurance is so important for everyone, visit Life Happens at www.lifehappens.org