What is life insurance for and Who needs it?
Our gratitude and thanks go out to our sponsor of this post, USAA, in helping promote life insurance awareness.
September is Life Insurance Awareness Month so I thought it would be a great time to discuss the matter of life insurance and why it’s an important part of our financial health.
Listen to Part 1 of my podcast interview with JJ Montanaro, a certified financial planner with USAA, kicks off with the basics by answering two simple questions. What is life insurance for and who needs it?
What is life insurance for?
The simple answer is that life insurance is a way to protect the ones we love and to meet our financial obligations if something happens to us. It’s there to do what we aren’t able to do when we’re not here.
It’s just one way to make provision for our family and loved ones. It goes hand-in-hand with Social Security benefits, VA benefits and the like that are there for survivors. However, life insurance is often neglected.
How do we know when we need life insurance?
Life events can trigger the need for life insurance. Consider the financial obligations that change when you:
- Graduate from college with outstanding loans that someone else (like parents) may have cosigned for you. When someone else has cosigned for a loan, that loan is not forgiven if you aren’t able to repay it.
- Get married.
- Buy a house and have a mortgage.
- Have kids or other dependents.
- Change jobs.
- Lose a loved one.
Even as a young man in the Navy, I considered life insurance as a “love letter” to my parents should something happen to me. A cheap policy would have gone a long way to cover expenses that my parents would be left to bear.
Consider these life insurance stats:
- 1 in 4 life insurance owners say the surviving members of their household would have immediate trouble paying living expenses if they were to lose the primary wage earner.
- 1 in 3 millennials acknowledge they need additional life insurance coverage.
- Only 44 percent of U.S. households have life insurance, yet 70 percent acknowledge the financial assistance it can provide.
- Nearly 4 in 10 adults only have life insurance through their employer, which typically is limited to a multiple of their income (often 2 times their income). 43% of Americans do not carry any type of life insurance at all. (2014-15 LIMRA Insurance Barometer)
What are the main objections to buying life insurance?
It costs too much.
Try plugging in your numbers in the USAA insurance calculator to see just how inexpensive it can be. Or you may want to get a quote for your specific situation. Life insurance gives us a tremendous return on investment.
I'm covered by my employer.
Even though you may have some insurance coverage through your employer, how do you know you have enough? And what happens when you leave that employer? Here’s a simple guide to help you determine what is the right amount of coverage for you and for your family.
These are just two of four insurance myths that people fall for. Don’t be one fooled. Everyone needs life insurance!
What is USAA and how can it benefit you?
Is USAA only for active military? No. It’s for anyone who is serving or has honorably served. Even if it was a parent or grandparent that honorably served, that membership can be passed down the line. This is just one of the many benefits to a USAA membership.