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- One of my best friends from high school died at 27, six months after giving birth to her third child.
- Thankfully, he had permanent life insurance, which meant his family could take the time to grieve.
- LIMRA found that 102 million Americans will have insufficient or no life insurance by 2021.
We all know that we can die at any moment. But as a healthy 20-something, I didn’t consider leaving you dear behind more than a nod of recognition.
That changed in January 2010 when I received a Facebook message that Matt, one of my best friends from high school, had died in a car accident. He is survived by his wife Tricia (his high school sweetheart and also my best friend) and three children, the youngest of whom is only six months old.
My high school friends and I were together for his funeral. It’s been less than ten years since we helped Matt propose to Tricia, eat takeout and bake pizza on game night, and perform in the school musical. Suddenly, my sense of mortality was very real.
In the months that followed, Tricia and I talked about Matt’s death and what to do when a loved one dies. At 27, I had absolutely no idea of the specifics involved, but since he and I were living at home at the time, I paid full attention.
One of the biggest questions in my mind is, “How can I prepare for this if it happens to me?” Because I suddenly believed it was possible.
The relief provided by life insurance
I was happy when I found out that Matt was there permanent life insuranceand allow Tricia the money to take care of the final plans with her young children without rushing from being a grieving widow to a working mother.
Matt and Tricia’s story is exactly the kind of risk this type of protection tries to minimize, and it can happen to anyone. Unlike many other types of life insuranceTerm insurance is simple – the policyholder receives a lump sum payment usually no tax when the insured dies. It does not attach to any mutual funds or investment vehicles; it will only help your loved ones take care of your funeral and replace some of your income after you die.
Financial experts recommend permanent life insurance for young dependent families, especially if one of the spouses is already working. This helps the surviving family members cover the death expenses (approximately $7,000 to $9,000) and meet their financial needs.
It is important to note that Stay-at-home spouses benefit from life insurance too. The unpaid work they do (like cooking, cleaning, babysitting, scheduling appointments, paying bills, etc.) has to be done by someone, and grieving partners may not be able to. they themselves bear the whole burden. Having life insurance on a non-working partner allows the other to offload some of these household responsibilities.
Too many Americans are uninsured
In what study by the Life Insurance Marketing and Research Associationonly 52% of Americans had life insurance in 2021, down from 63% in 2011. LIMRA reported that 102 million Americans need life insurance or multiple policies.
Of the survey respondents, 42% said they would “face financial hardship within six months” if a family member dies, so it’s safe to say A large portion of the population needs the protection that life insurance provides.
While many families will benefit from having life insurance, it is not essential in all cases. To determine if life insurance is right for you, ask yourself these two questions:
- Is someone else dependent on my income and/or employment?
- Will my family face financial problems when I die?
If the answer to any of these questions is yes, getting a life insurance policy is worth considering.
Some life insurance is better than none
A general rule of thumb is to start a policy with a premium equal to ten times your salary, although this is just the back number of the towel. You may need more or less, depending on your mortgage payment, savings status, credit balance, whether your family has special needs, and many other factors. Tricia shared with me later that while the life insurance amount she and Matt had chosen was enough to support her family, it would have been easier if they had doubled it.
Regardless of whether the amount of life insurance you choose is the right amount, it’s safe to say that some are better than none.
Matt’s death has changed my view of life insurance. Since then, it has never been a luxury in my budget, but a necessity. Tricia’s story could easily be mine.
I am thankful that two of my friends were smarter than me at 27 and got life insurance to protect their young family. Without their planning and foresight, it could easily have been a double disaster.