Of course your car is insured — there are lots of crazy drivers out there. Ditto your home against fire, or at least your belongings if you rent. That’s probably the biggest investment you have, so you need to protect it, right?
How about protecting your family with life insurance? Uh, not so much. Maybe you think you’re covered by your employer or your spouse, or you can’t afford it, or you’re young, single and healthy so you don’t need it.
“No question, life insurance isn’t exactly sparkling, happy-hour conversation,” said Annise Henson, director of life insurance products for employee benefit provider Unum. “Millions of America’s workers have no life insurance, and even those who do have coverage may not have enough.”
If any of this sounds like you, you could be creating a serious financial problem for your family.
Your employer pays for your life insurance, so you don’t have to worry about it. This is way better than nothing, but if your employer is paying for your life insurance coverage, it’s almost certainly a group policy that only covers you while you’re employed there. “That means you could be vulnerable if you lose or leave your job,” Henson said. “Sometimes you can buy insurance at work that is yours to keep if you change jobs or retire.”
You already have enough life insurance. Probably not. For people who manage their household money, more than half believe they’d run into financial difficulty within a matter of months if a wage-earner died unexpectedly. Although the rule of thumb recommends 7 to 10 times your annual income for life insurance coverage, Henson said it’s important to purchase any level of coverage that fits in your budget.
You can’t afford life insurance. There are many types of life insurance available to meet different needs and budgets. You may have some term life insurance coverage as part of your workplace benefits, but should consider a permanent whole life policy to supplement that coverage. “Even a little extra life insurance is better than none at all,” she said. “If you buy a policy at work, you may be able to pay for it through payroll deduction.”
You’re single so you don’t need life insurance. Even if no one else is depending on your income, you’re still likely to leave behind bills, credit card balances and final expenses such as funeral costs. These expenses could be an unnecessary burden on your parents, partner or siblings at a difficult time.
You’re healthy — you can worry about life insurance when you get older. The cost of buying insurance tends to increase as you age. And buying a policy when you’re young and healthy means you’ll already have the coverage if you develop a health condition later that could make you uninsurable.
It’s a cliché for a reason: Life insurance is for the living. “It’s about making sure your loved ones don’t have to deal with serious financial problems at an already difficult time,” Henson said. Taking time to review your life insurance needs and coverage is one of the smartest things you can do to protect yourself and your family.