Too many Americans don’t understand life insurance or get the coverage they need

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Are you confused about life insurance?

Key Point

• If you’ve never purchased life insurance before, the process can be overwhelming.
• There are certain basic facts about life insurance that make the idea of ​​buying life insurance more comfortable.

You wouldn’t go out and buy a fancy kitchen gadget without really understanding what it does, would you? Well, the same thought process might apply to life insurance.

If you don’t understand how life insurance works, you may not have much motivation to put it at the top of your priority list. It can get you into a situation.

You see, the purpose of life insurance is to ensure that your loved ones are covered if you die an untimely death. of people can enjoy it with more peace of mind.

However, according to a recent Life Happens survey, only 17% of consumers who feel unfamiliar with life insurance have it. In contrast, 62% of those who feel very knowledgeable about life insurance have a good policy. So if you fall into the underinformed category about life insurance, there are some important things to know.

1. The sooner you apply, the cheaper your premium may be

It’s easy to think of life insurance as something with an unmanageable price tag. However, life insurance is actually quite affordable. Also, the younger you are when you apply, the more likely you are to have competitive premiums because you are in good health.

2. Term life insurance is the most affordable bet

Term insurance is insurance with a limited period of coverage. It is common to purchase term insurance for 20 or 30 years, but in some circumstances you may only need 10 years.

One thing you should know about term insurance is that it does not accumulate cash value of any kind. If you don’t die during the policy period, there will be no money paid to your family. However, term life insurance is generally your best bet for affordable coverage, so it’s a good idea to take out term life insurance, especially if costs are a concern.

In contrast, whole life insurance provides permanent coverage and insurance accumulates cash value. However, premiums charged can be many times higher than term life insurance premiums.

3. You can choose the amount of coverage

For some people, life insurance with a death benefit of $2 million or $3 million is appropriate. But if she earns only $60,000 a year, which is enough to support her entire family, she’ll probably get much lower benefits and lower premiums.

A good rule of thumb for buying life insurance is to ensure that you have enough coverage to cover 10 to 12 years of income. So, in this example, his $600,000 death benefit may be enough for your family.

The more you know about life insurance, the more confident you will be in purchasing insurance. Take the time to learn about life insurance and start pricing your options so you can give your loved ones the financial protection they deserve.