By Christina Guerrero
DON’T JUDGE ME, but I have to admit I
didn’t acquire life insurance until I was in my
30s. I was intimidated, and I didn’t realize
how affordable it could be. But I finally woke
up and realized my family would be in a real
financial bind without my monthly income if
something ever happened to me. Apparently,
I’m not alone.
Eighty percent of consumers misjudge
the price for term life insurance, according to
a 2015 study by LIMRA, a financial services
research trade association ( limra.com). Two-thirds of Generation X and Millennial consumers have refrained from buying life
insurance because they overestimated the
cost; Gen Xers overestimated the cost by 119
percent and Millennials overestimated the
cost by 213 percent.
“In addition to believing life insurance is
too expensive, our research has shown that
consumers are intimidated by the process of
buying life insurance—four in 10 don’t know
how much they need or what to buy,” says
Todd A. Silverhart, corporate vice president
and director of LIMRA. “Having a better
understanding about the factors that influ-
ence pricing might help consumers feel more
confident and encourage them to pursue get-
ting coverage they believe they need.”
While Americans know the importance
of life insurance, they tend to prioritize other
short-term expenditures, according to the
study. Fortunately, there are ways to help you
determine the amount of coverage your fam-
ily may need to meet financial obligations
upon your death.
“Determining how much life insurance
you need is perhaps one of the most confusing
questions for people,” says Aaron Seurkamp,
senior vice president in the life and annuity
division at Protective Life Insurance Company.
“At Protective, we really want to ensure people
have the right information to make confident
decisions. It’s all about helping people deter-
mine what is right for their needs.”
Many variable factors go into determin-
ing the best policy type for your family, so
meet with a qualified insurance agent or
financial adviser who can review your family’s
debts, assets and financial goals, and provide
you with a solid estimate. Protective suggests
considering the following tips before deciding
how much life insurance you need.
• How much money would your family
need each month to maintain their current
standard of living? Begin by reviewing your
monthly bank statements and looking at how
much you actually spend each month.
• What assets do you have in your savings
account and in your investments, such as
your 401(k)? Do you have life insurance policies, and, if so, what are the policy limits?
Next, figure in your debts to get an estimate of
how much life insurance you will need. You
might find that you don’t need to replace all of
your income based on these findings.
• Think about how much debt you’re carrying, including your mortgage. If you have
substantial debt, be sure to factor it into your
life insurance calculation so that your family
will have enough coverage to pay it off. Start
by reviewing your monthly budget. Consider
how long it will take you to pay off car loans,
credit cards, etc.
• A stay-at-home parent caring for young
children is often seen as not needing life
insurance. The fact is, even a stay-at-home
parent who isn’t drawing a paycheck may still
need life insurance. Think about the estimated costs associated with having to hire a
full-time caregiver for your children if your
spouse should die.
• Many people become fixated on income
replacement and forget to include additional
expenses unique to their situation, such as
funeral costs, final medical bills, the cost of
college, care for special-needs children or
even funds for taking care of an elderly relative. Think about how much these additional
expenses can add up, and include them in
your calculations. C
The Costco Connection
Costco Services offers life insurance
through Protective Life Insurance
Company. For more information, visit
Costco.com and enter “life insurance”
in the search box, or call (844) 740-5433.
Prudent planning
Life insurance may be more
reasonable than you think
inside costco
“Determining how
much life insurance
you need is ... one of
the most confusing
questions for people.”
—Aaron Seurkamp
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