The majority of people today are aware of the importance of having life insurance. It’s no longer in the “ok maybe” category but rather in the “get it done” category for most people. Certainly, we are aware that there is a cost associated with our death.
There aren’t many things that can compare to borrowing money or withdrawing funds from your savings account when mourning the loss of a loved one or good friend.
What Is the Current Average Cost of a Funeral?
Knowing how much your funeral will cost in advance will help you decide how much life insurance to buy. According to the details above, if you’re buying life insurance to cover your funeral and burial expenses, $10,000 to $15,000 should suffice.
What Happens If I Want to Buy More Than Burial Insurance?
There are numerous reasons to purchase life insurance, especially if you are the family’s primary earner. When you consider how your income loss would impact your family, a $10,000 burial policy will fall well short of their financial requirements.
We suggest using an online insurance calculator or, better still, having this calculated for you during a quick interview with an experienced and trustworthy agent. If you decide to go it alone, John Hancock Insurance offers a life insurance calculator to help you figure out how much coverage you really need.
What Happens If I Can’t Afford the Insurance I Need?
You definitely will, believe it or not. You simply need to consider the various forms of life insurance that would better suit your budget. Consider the following scenario:
Let’s take the case of John Jones. After conducting an insurance need report, John determined that he requires $685,000 in life insurance to provide for his wife and two children in the event of his death. John is a 30-year-old nonsmoker who is in excellent health. Here are some of John’s choices:
- 20-Year Term Life Insurance: $25.68 per month
- Universal Life Insurance: $336 per month
- Whole Life Insurance: $610 per month
Certainly, John can afford the Term Policy’s premium of $25.68. He may also transfer any or all of the benefits to lifetime life insurance before the period expires without worrying about any new health issues.
Suppose John believes that term insurance is a waste of money. In that case, he could choose a Universal Life policy that builds cash value, or he might use Universal Life to cover part of the needed death benefit and Term Insurance to cover the rest. This will lower his total monthly insurance premium to a more manageable level.
If policy benefits are more important to John than the monthly premium, he can choose Whole Life Insurance, which cannot be canceled as long as the premium is paid.
Permanent insurance plans, such as Universal Life or Whole Life, accumulate substantial cash value over time, and customers will have access to that cash anytime they need it, with no questions asked.
Why Don’t You Have Life Insurance if You Know You Need It?
You’d think that as time passes, more and more Americans will purchase life insurance, particularly because insurance companies are advertising more than ever. Regrettably, this is not the case. In reality, fewer people have life insurance today than they did in 1984.
According to current statistics, only about 60% of Americans have life insurance. And a significant portion of those Americans gets their life insurance from their employer, which is often insufficient.
It’s cool to have insurance through your employer, but it’s not enough. And your insurance doesn’t follow you when you leave.