The thought of life insurance might never have crossed some people's minds prior to the COVID-19 outbreak, but in light of the pandemic, a growing number of Americans are changing their tune. A good 36% now think they'll be buying life insurance in the next 12 months, according to insurance research organization LIMRA, and while there's no telling how many will actually follow through, the fact that it's on people's radar is a step in the right direction.
If you're currently without life insurance, it pays to explore your options for buying an affordable policy. Without one, you could end up leaving the people you care about in a serious financial lurch.
Why the need for life insurance?
It's easy to assume that life insurance is a product best reserved for the wealthy, but the reality is that you don't need to earn or have a lot of money to need a policy of your own; you just need to have people in your life who depend on you financially or who stand to struggle financially if you were to pass away.
Unfortunately, many stories have emerged from the COVID-19 crisis of otherwise healthy, relatively young Americans who were put on ventilators or, worse yet, succumbed to illness during the pandemic. And the reality is that no one is immune to the freak accidents we read about in the news more often than we'd like. That's why you can't assume that you're too young to buy life insurance or that you don't need it because you never get sick. As we've learned the hard way, life really can change in an instant, and having a policy is a good way to help ensure that your loved ones don't struggle if something were to happen to you.
Furthermore, it's not just people working outside the home who need life insurance. If you're a stay-at-home parent, for example, who provides child care so your spouse or partner can work, you, too, should have a policy in place. If you were to pass unexpectedly, your children's other parent would have to bear the cost of child care, which could constitute a major burden on a single salary.
What's the right type of life insurance for you?
Life insurance comes in two main varieties: permanent life insurance (also known as whole-life) and term life insurance. With the former, your policy covers you forever and accumulates a cash value that you can borrow against or even take out if the need arises, but you'll pay for that privilege. Policygenius reports that whole-life insurance can cost 6 to 10 times more than a term life policy with a similar death benefit (the amount your loved ones receive in the event of your passing ). Term life insurance, however, doesn't accumulate a cash value and only covers you for a specified period of time, or term. If you're 40 years old, you might decide that a 30-year term life policy will suffice, because by the time you're 70, you'll have Social Security benefits that a surviving spouse can collect in the event of your passing.
You also don't need to overpurchase a death benefit. Think about how much replacement income you want your policy to cover, because the higher that amount, the more you'll pay in premiums. If you're a family that's used to living on $50,000 a year with a $150,000 mortgage, you don't need a $2 million policy.
The sooner you purchase life insurance, the sooner you'll get peace of mind that your family is protected in the event that something were to happen to you. That's an important thing to have, and not just during a global health crisis.