When planning your family?s finances, do you take into account life insurance?
It?s easy to overlook life insurance as an essential aspect of financial planning. However, it?s important to consider the impact that your death might have on your family?s financial situation. Unfortunately, most Americans don?t see life insurance as essential to overall financial planning.
In fact, when viewed as a meal, life insurance doesn?t get many high marks from Americans. The following infographic from State Farm reveals how many Americans perceive life insurance:
As you can see, only 34 percent of Americans view life insurance as the ?main course? — something that is vital to financial planning. Only 16 percent of Americans feel that life insurance is important to have when starting out. If you combine those two numbers, it becomes clear that perhaps the situation isn?t quite so dire: About 50 percent of Americans feel that life insurance has some importance.
It is also encouraging that only 8 percent of Americans feel that life insurance is something that they should have, but choose not to get anyway (kind of like eating their vegetables!).
However, there is a rather significant number of Americans who feel as though life insurance is a dessert they can?t afford. They think that it would be nice to have life insurance, but they see it as more of an indulgence. This is unfortunate, since it highlights the fact that many Americans aren?t as educated as they could be about life insurance.
Life Insurance Can Be Affordable
For many Americans, there is an idea that life insurance is unaffordable. This doesn?t have to be the case. While whole life/universal life might be outside of the budget for some families, this isn?t the only type of insurance available. Term life insurance is a good choice for many families — especially young families just starting out.
Term life insurance is available for a set period of time. Many people choose to purchase a policy with a term of 20 years, but I decided to purchase a policy with a 30-year term in order to ensure that my term life policy covers me up until my son is out of the house and established, and my husband and I are enjoying our version of ?retirement? (which probably won?t look like a ?real? retirement). There are some policies with terms as long as 40 years, if you feel like that makes more sense for you.
With a term life policy, it?s possible to get a large amount of coverage for a fairly low sum. It?s possible to purchase a $1 million term life insurance policy for as little as $35 a month, depending on various risk factors (you might pay more if you are considered a higher risk). That?s not a bad price to pay for peace of mind and protection for your family.
You don?t even have to get an insurance policy that big to care for your family. I don?t have $1 million in life insurance coverage. Basically, my husband and I sat down and decided what it would take to stabilize the situation. We have enough coverage to pay off a home mortgage, outstanding student loan debt, and our car loans, plus a little for our son?s college and other expenses. The fact of the matter is that my husband and I both earn stable incomes, so we didn?t feel that total income replacement was important.
And, of course, as time progress, the life insurance needs reduce. My son needs less looking after, and we owe less on student loans and cars. We are comfortable with our coverage because we?ve talked about it and we?ve performed a needs assessment.
As you look forward to the rest of your life, consider your situation. Could you benefit from the peace of mind that comes with knowing your family is provided for? Life insurance doesn?t have to break the bank, and it can make all the difference in the world in the face of the unthinkable.
Disclosure: This blog post was written as part of a sponsored program for State Farm to raise awareness about the importance of life insurance. All views expressed are entirely my own, and were not influenced or directed by State Farm. You can learn more about this blogger program and life insurance at GoodNeighbors.com, PlantingMoneySeeds.com, and by following #startliving on Twitter.