We all have them from time to time when we fail to do something we know we should do.
Some excuses are legitimate, but most don’t stand up to scrutiny.
That’s especially true when it comes to one of the most important components of sound financial planning: acquiring enough life insurance to make sure your loved ones are protected if you die sooner than you expect.
You probably enjoy talking about investing, seeing your money grow, buying homes and cars, sending children to college, having enough to retire comfortably — but all of that is built on one basic assumption: that you will be alive to do and enjoy these things.
But what if you’re not? Will your spouse, partner or children be able to experience all that you hope for them? Making sure they can is what life insurance is all about.
Yet ownership of life insurance is at a 50-year low, according to the Life Insurance Marketing Association, which says that one in every four U.S. households has no life insurance, including 11 million households with children under age 18. And in 40% of households with children under age 18, the mother is the sole or primary wage earner. Women who own some life insurance have only 69% of the average coverage on men.
Equally worrisome is the fact that the average amount of coverage for U.S. adults has dropped to $167,000, down from $300,000 a decade ago.
Lack of awareness isn’t the problem. According to the Life and Health Insurance Foundation for Education, 93% of Americans believe it’s important for people to own life insurance, and nearly 50% admit they need more coverage!
That’s like saying, “I know I need it, but I’m not going to do anything about it!”
There are three reasons (excuses) people cite when explaining why they haven’t gotten the coverage they know they need, says LIMRA. Do any of these apply to you?
1. “It’s too expensive.”
2. “I just haven’t gotten around to it.” (procrastination)
3. “I don’t know enough about it to buy it.”
Are any of these excuses valid?
If you believe life insurance is too expensive, I ask you: compared to what? A big-screen television? Well, life insurance is a necessity, not a luxury. And it’s never been more affordable. Prices are at least 50% less than they were a decade ago. A 40-year-old, nonsmoking male in good health can buy a $1 million, 20-year, level-term policy for $73 per month. A healthy, nonsmoking female of the same age would pay even less.
If you have been procrastinating, consider this for your tombstone: “Here lies ________. His family is destitute because he was lazy.”
And if you think you don’t know enough about life insurance, well, that’s what financial advisors like us are for. You only need to know that you want the coverage for your family. We’ll do the rest — including figuring out how you’ll pay for it, if you’re not sure you can afford it. (See excuse #1.)
You need to protect your spouse, partner and children. September is Life Insurance Awareness Month — a good time to talk to us about your need for life insurance and how to get you the coverage you need at the right price.
Originally published in Inside Personal Finance September 2015