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Do You Know the Facts of Life?

… the facts of life insurance, that is.

Imagine a financial future filled with sufficient funds to buy homes and cars, pay for college for your children, and have plenty of money so you can retire in financial comfort.

But wait.

All that assumes you’ll be alive and well, able to enjoy all that. But if something happens to you, will your spouse and children still be able to have and do all that you want for them?

Financially protecting your loved ones is what life insurance is all about. Sadly, many American families don’t own any (or enough) life insurance – often because they are wildly incorrect about how much it costs
Indeed, LIMRA data shows1 that:

  • 46% of U.S. households do not own any life insurance;
  • 44% would feel the financial impact within six months if the household’s primary wage earner passes away;
  • 28% would feel the impact within one month;
  • half of those millennials surveyed thought a policy that really costs around $160 per year would actually cost $1,000 or more

Life insurance can be surprisingly inexpensive nowadays. For example, on average, a 50-year-old male nonsmoker in good health can get a $500,000, 20-year term life insurance policy for about $91 per month.2 A similar female would pay on average just $72 per month for such a policy.

Cost isn’t the only reason people who need life insurance haven’t bought it. Procrastination is a prime culprit, making some children want to erect a tombstone that reads, “Here lies Dad. He left us in dire straits because he was too lazy to buy life insurance.”

According to LIMRA, 36% of Americans say they intend to purchase life coverage in the next 12 months.1 But will they?

Talk with us. We can help you determine if you need life insurance, and if so, we’ll tell you the amount you need to help protect your family and the right type of coverage that’s best for you.


How to Quickly Estimate If Your Current Coverage Is Enough

Just cut in half and drop a zero

To help you see if you have enough life insurance, try this nifty trick:
1. How much do you have in total death benefits?
2. Cut that number in half.
3. Drop a zero.

This reveals how much income the insurance may reasonably be expected to provide on a monthly basis.

1. You have $500,000 in life insurance.
2. Cut in half, leaving you with $250,000.
3. Drop a zero, and you end up with $25,000.

$500,000 sounds like a lot of money – but it may produce only around $25,000 in annual income, or about $2,000 per month. Can your survivors live on two grand? If not, you may need more than $500,000 in life insurance.


1Source: Stafford, F. (2020, June 16). Is Life Insurance Tomorrow’s Problem? Findings from the 2020 Insurance Barometer Study. https://lifehappens.org/blog/is-life-insurance-tomorrows-problem-findings-from-the-2020-insurance-barometer-study/

2Source: Price, S. (2020, October 22). Average Cost of Life Insurance (2020): Rates by Age, Term and Policy Size. ValuePenguin. https://www.valuepenguin.com/average-cost-life-insurance#average

Prices listed are estimates and may not reflect actual premiums. Contact an insurance producer for more information.

Neither Edelman Financial Engines nor any of its affiliates, or their advisors, sell insurance products. EFE’s affiliates may receive insurance-related compensation for the referral of insurance opportunities to third parties if individuals elect to purchase insurance through those third parties. AM1300107.

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