Life Insurance 101

Are You Covered by Your Life Insurance?

There’s a substantial gap between how much life insurance many Americans have and how much they need. And being underinsured can have a significant impact on a family in the event of an unexpected passing.

Your life insurance policy gives you peace of mind and will help ensure your family’s financial future after you’re gone, right? Maybe not. Six out of 10 Americans have purchased life insurance of some kind, but many of these policies may be drastically insufficient for the needs of their family.

Whether you purchased life insurance coverage to help pay a home mortgage, protect income, or pay for burial or cremation costs, most people agree it’s an important benefit. Nearly 60 percent of Americans believe the financial impact of a spouse’s death will be felt within a year or less.1

And still, nearly 130 million Americans are altogether uninsured.2,3 The most common reason for skipping this benefit is an overestimation of life insurance costs. Check the numbers before making that decision: What they don’t realize is that it may only run a non-smoking 30-year-old female $13.59 and male $14.67 monthly for a $250,000 20-year policy.4

Be sure to educate yourself and consider: How much life insurance do we need, and what will it cost? While it’s recommended to carry coverage of seven to 10 times your income,5 most people have only purchased two to three times their salary.1 

Consider these figures and do some research of your own. Take time to consider what your needs are and how you can best protect your family. You may find that purchasing a life insurance policy is more affordable, and more important, than you had previously believed.

Does Your Life Insurance Have Your Back?

When it comes to life insurance, many Americans are unaware that they’re underinsured.

Six in 10 Americans have purchased some form of life insurance.1

And 85% believe that adequate life insurance is important for financial peace of mind..1

Yet, the reality is that those who have life insurance coverage often possess only a fraction of what they need.

The American Council of Life Insurers recommends that Americans purchase a policy with value equal to 7 to 10 times their annual income.2

Why the Gap?

People have a variety of motives for buying life insurance. The four most cited reasons include:

  • To help provide for a spouse or children
  • To help protect income
  • To help pay for a mortgage
  • To help cover burial or cremation costs

129.7 million Americans have not purchased life insurance.3,4

Top reasons why people don’t plan on buying life insurance.1

  • Don’t see a need at this point (73%)
  • Other financial priorities (72%)
  • Belief that employer-provided coverage is enough (60%)
  • Haven’t thought about it (56%)

Consumers tend to overestimate the cost of a life insurance policy

Financial Impact of Losing a Spouse

Here’s how long people believe it would take to feel the financial impact.1

  • Don’t know (13%)
  • 1 month or less (29%)
  • 6months or less (46%)
  • 12 months or less (59%)

At its most basic level, the purpose of life insurance is to help provide peace of mind and help protect your loved ones from financial hardship in the event of your unexpected passing. Review your coverage today to see if it’s enough to help protect the ones you care about most.

Sources

1. 2016 Amica Life Financial Peace of Mind Survey, 2016.
2. Life Insurers Fact Book, The American Council of Life Insurers, 2016.
3. 2016 Insurance Barometer Study, LIMRA and Life Happens, 2016.
4. U.S. and World Population Clock, U.S. Census Bureau, 2016.

Not sure how much coverage you need? Get a clearer picture of your financial situation with the life insurance needs calculator.

1 2016 Amica Life Financial Peace of Mind Survey, 2016.

2 2016 Insurance Barometer Study, LIMRA and Life Happens, 2016.

3 U.S. and World Population Clock, U.S. Census Bureau, 2016.

4 Sample monthly premiums for 20-year Term Life insurance with benefits amounts shown for a Female and Male at age shown. Rates are Premier Select and are guaranteed to remain level for the 20-year period. Premiums are paid monthly via EFT (electronic funds transfer). Actual premiums can only be determined by a full application and underwriting process, including some medical testing at our expense. Depending on your exact age and health, your actual rates may be higher or lower. Standard form numbers ICC15 FGCLT01-01 in most states. Not all plans are available in all durations and at all ages. Some features may not be available in all states.

5 Life Insurers Fact Book, The American Council of Life Insurers, 2016.

ALIC52419 (exp. 10/20)

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