Life Insurance
Facts
Life Insurance
Facts
Why should you get life insurance?
If life insurance benefits outweigh the costs, it’s worth buying coverage to protect your family. Often,
you’ll spend far less for coverage than your family would receive if you died
unexpectedly. Here’s what typical expenses look like for the average American
family:
- Mortgage – $293,349
- Debt – $92,727
- College tuition for a public four-year in-state
university – $42,240 - Every day bills and expenses – $63,036
- Medical debt – $2,000
- End of life expenses – $8,000 to $10,000
That’s $503,352 in expenses that your family
would be liable for. Meanwhile, a healthy adult in their 30s can expect to pay
an average of $32 a month for a 20-year policy with a $500,000 death benefit,
while a healthy adult in their 40s would pay $60. That’s a fraction of the cost
— $7,680 and $14,400 over 20 years, respectively.
How much does a funeral
cost?
On average, funerals cost $8,000-$10,000. The
best way to protect your loved ones from financially suffering after your death
is to have a financial plan in place. Setting up a life insurance policy can
ease many of the financial duress that is often involved.
Life insurance can be used to cover a worthwhile variety of
common expenses, like:
- Co-signed debt, including student loans
- Mortgages
- College expenses for the kids
- Living expenses for your family
- Stay-at-home labor expenses (cooking, cleaning, etc.)
- Burial expenses
- Loans from family members
- Estate taxes that your heirs must pay for other assets
Additional Benefits
- Life insurance costs are very small compared to the
high death benefit payout. - For anyone with financial obligations, the safety net
of a life insurance policy is worth the cost. - Healthy people in their 30s could pay as little as $32
monthly for a $500,000 death benefit.
More facts:
- In 2020, 54% of Americans were covered by life
insurance. - 50% of people overestimate the cost of term life
insurance. Millennials overestimate the cost by 213%. - The average premium for a male rose 258% between age 25
and age 50. - The number of consumers who prefer internet sales for
life insurance increased from 17 percent in 2011 to 29 percent in 2020. - 42% of millennials estimate a $250,000 term life policy
for a young, healthy individual would cost $1,000 or more when it is
closer to $160 per year. - 38% of millennials refrain from purchasing coverage
because they fear they won’t qualify. - 21% of baby boomers and 36% of generation X believe
their partner should get more life insurance coverage.
Life
Insurance Myths:
- Myth: Life insurance is only for healthy, middle-aged
adults. - Fact: You are never too old or too young to purchase
life insurance. It’s true that your costs will increase as you age and
that people with illnesses or certain risk factors may pay more, but there
are life insurance policies available for everyone. - Myth: I’m single or married with no children, so I
don’t need life insurance. - Fact: Your loved ones can use life insurance benefits
to pay off your debts, including student loans, mortgages, and car loans.
It can also be used to take care of your final expenses, such as burial. - Myth: My student loans will be forgiven when I die, so
I don’t need life insurance. - Fact: To keep it simple, it depends on the type of
student loans you have. Federal student loan debt is forgiven upon death
or total disability, and family members are not responsible for it. In
this case, a life insurance payout could go to other things such as living
expenses or funeral costs. - Private student loan debt can be different and is
not as cut and dry. You’ll need to ask your lender if they provide student
loan death forgiveness, which will give you a better estimate of how much
life insurance coverage you need. - Myth: My beneficiaries will have to pay income taxes on
the proceeds of my life insurance policy. - Fact: Life insurance benefits are generally income
tax-free up to a certain threshold, according to the Internal Revenue
Service (IRS). However, any interest payments on top of the policy may be
taxed. - Myth: You cannot get life insurance if you have health issues.
- Fact: While health is often used to calculate rates and
coverage amounts when determining a policy’s premium, it doesn’t mean that
life insurance is out of the question with a pre-existing condition. Even
further, some policies are specifically built for consumers with
pre-existing conditions, such as diabetes.
Additionally, suppose the individual is
within the eligible age range, typically 66 to 85. In that case, they can
consider guaranteed issue life insurance if they don’t want their medical
information to be a factor at all.
For more information
contact: bill@awareinsurance.com
