OK, trick headline. It really doesn’t make sense to never have life insurance. But it appears a good chunk of our country’s populace believe that headline as ownership of individual life insurance in the U.S. has hit a 50 year low according to recent studies by LIMRA, a global firm that provides research to insurance and financial services companies.
It’s estimated that over 56 percent of U.S. households DO NOT have individual life insurance policies and that gaping hole is mostly among households with children 18 and under, which arguably have the greatest need for a life estate. This percent represents some 11 million families plus that have no life insurance coverage.
And sure, some companies offer their employee’s life insurance coverage as part of the employee benefit package. And yes, it can be an inexpensive and hassle-free way to get coverage but let’s face it. It’s very limited and is normally designed to only replace an employee’s first year or two at work and typically never meets that employee’s family life needs. And of course if that employee leaves the job (as most do), his or her life insurance coverage ends. This very well leaves them zero life estate at a time when it might be harder to qualify for an individual policy due to age or changes in health.
“Life insurance isnt’ for those who die. It’s for those who live,” says the Life and Health Insurance for Education (LHIE). “You’ll never meet with a widow or widower who complains that their spouse had too much life insurance.” “An alarming number of American singles and families are not taking steps to protect themselves because they’re either confused about how to go about it, or have misconceptions about how much life insurance they need and what it costs. “Life insurance prices have come down over the past 25 to 30 years,” says LHIE, “because people are living longer.”
To figure out how much life insurance, you need to think through the worse-case scenario. If you died tomorrow, what does your family’s week, months and years ahead look like financially? Would they have the money to pay for your final expenses (e.g., funeral costs, medical bills, taxes, debts, lawyers’ fees, etc.)? How would your spouse or partner meet ongoing living expenses like the rent or mortgage, children, food, clothing, transporation or healthcare? Without your contribution to the household, would your partner or spouse be able to save enough money to put the kids through school, college or retire comfortably? Most life survivor’s are forced to get a job or a second one not because they wanted to but because they had to. Worse later in life. 
So, life insurance is something we ALL need, typically more than less. The real problem is if people can’t currently live within their means, how can they ever expect to make it with the unexpected death of a primary breadwinner? Let’s face it, when you lose a spouse or partner, there’s enough to deal with without throwing in more financial drama and hardship. As a single parent, you’re the sole caregiver, breadwinner, cook, chauffeur, therapist and so much more. Yet nearly four in ten single parents have NO life insurance whatsoever, and many with coverage say they need much more than they have.
And if you’re retired, depending upon the size of your estate, your heirs could be hit with a large estate tax payment (up to 50% or more of your estate). The proceeds of a life insurance policy are typically payable immediately, allowing heirs to arrange for estate taxes, funeral costs and other debts without having to liquidate assets or if no assets sponsor a series of family car washes to pay for your funeral or cremation (yes, I’ve actually witnessed that as well)!
Most singles rationalize they don’t need life insurance because no one depends on them financially. Until it dawns on them that they may wind up being the sole financial support for aging parents or siblings. Others may be carrying significant debt they they wouldn’t want to pass on to family members who survive them.
How much life insurance is enough? The rule of thumb is a life estate should equal 8 to 10 times your income. But there are a bunch more factors to consider like age, health, mortgage, children, heirs, etc. And the truth is life insurance doesn’t have to cost alot. If you’d like a quality referral and ‘no pressure’ discount review of an exisiting policy with a licensed life coach, drop me a line at iprotect@finances4today.com. You’ll thank me later!
I’m Gus Fernandez and I’m fiercely dedicated to saving and making you money!
Gus Fernandez, a/k/a the Wealth Doc
bit.ly/whylistentogus
Please be sure to read our disclaimer prior to acting on any information you find on this website There is never any substitute for personalized professional advice.
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