It’s a topic very few people like to discuss: Death. And for obvious reasons. No one wants to think about leaving the people they love behind, or what might happen to them if the unexpected occurs.
In a recent online survey* of 1,000 U.S. adults, 35% of respondents said thinking about what would happen to family if they died caused them the most anxiety, second only to going to the dentist, named by 40% of survey respondents.
With so many people feeling anxious about simply talking about life after death, it’s not surprising a large number of people aren’t preparing for it either, leaving their families financially exposed.
In the Life Happens and LIMRA 2018 Insurance Barometer Study, 61% of people said they don’t buy life insurance or more of it because they have other financial priorities: saving for a comfortable retirement, paying for health coverage, and living expenses. But if you’re a family’s primary wage earner, who’s going to take care of those financial priorities in the case of your death?
Nearly 60% of those surveyed said they’d feel the financial impact within 90 days if the household’s primary wage-earner died unexpectedly. That’s where life insurance comes in. In addition to day-to-day expenses, life insurance can provide money to help your spouse and loved ones cover future financial obligations.
Pay funeral expenses
If talking about death makes people anxious, then planning your own funeral may be even more difficult. But it’s the smart thing to do. According to the National Funeral Directors Association, the average cost of a funeral in 2017 was $8,755. But with more than half of survey respondents saying they’d have trouble paying bills within three months of the primary wage-earner’s death, having enough saved to also cover funeral costs could be a stretch for many families. Life insurance can provide money to help your loved ones cover those costs.
Help your spouse through retirement
Even if your working years are behind you, if you died today, your spouse could live on for many years. Life insurance can last through retirement. In the event of your death, your plan can help protect your spouse’s retirement savings by covering large expenses, such as paying the mortgage, a major emergency or unexpected costs. And if you were to pass away during your working years, your spouse could use your life insurance benefit to replace your lost contributions to a retirement account.
Provide for your children
Raising children is extremely rewarding, but education, extracurriculars and day-to-day care can be expensive. In the case of your death, life insurance can help provide money to help pay for college aid, relieving your loved ones of a large financial burden. Life insurance can also be used to provide an inheritance for loved ones so their financial future is secure.
The amount of life insurance coverage you should get depends on many factors, such as your annual income, existing debt and how much you want to leave behind. It’s best to review your current financial situation with a financial advisor, but there are several rules of thumb to help you get started planning:
• Multiply your annual income by 10
• Buy 10 times your income, plus $100,000 per child for college expenses
• The DIME formula based on debt and final expenses, income, mortgage and education
Once you’ve settled on a number, explore policy options offered by your employer, or individually if you’re not employed. You’ll find a range of plans for every stage of your life to help provide for your loved ones in a time of need.
* Online survey fielded by DYNATA Aug. 13-14, 2019 among 1,000 adults ages 18+ with a representative sample of male/female and geographic distribution.