5 reasons you don’t have enough life insurance


5 reasons you don’t have enough life insurance

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. Millions of America’s workers have no life insurance, and even those who do have coverage may not have enough. (Read more: Americans’ life insurance gap grows to $16 trillion.)

No question, life insurance isn’t exactly sparkling happy hour conversation. Or 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. But 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. 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. The rule of thumb is 7 to 10 times your annual income or as much as 20 years for households with young children. That can vary depending on what other resources you have.

You can’t afford life insurance. There are many types of life insurance available to meet different needs and budgets. Life insurance plans for a set period of time — say 10 or 15 years — are often available for a few dollars a pay period. Even a little life insurance is better than none at all. 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.

Your partner has a good income, so even if you don’t have coverage it wouldn’t have a major impact on my family. Most families today depend on two incomes to make ends meet. Even stay-at-home spouses are contributing a lot to the family’s way of life by handling child care, laundry, cooking, shopping, cleaning, home maintenance, transportation, errands — help you might have to pay for if that spouse died.

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. 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.

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