September marks Life Insurance Awareness Month, a time dedicated to educating people about the importance of life insurance, and why it’s a crucial part of protecting your family’s financial future. While it’s easy to overlook, life insurance can be one of the most valuable financial tools you have. It provides a safety net for your loved ones, ensuring they are taken care of in case something unexpected happens, can help you cover extended care costs while you’re living, and provide a fund for your funeral and final expenses.
Here’s why you should take some time this month to think about your life insurance needs—and how doing so can benefit you and your family in the long run.
What Is Life Insurance, and Why Do You Need It?
Life insurance is a contract with an insurance company that provides a lump sum payout, (also known as a death benefit), to your beneficiaries when you pass away. This payout can be used to cover expenses such as:
– Living expenses (replacing your income)
– Mortgage payments
– Childcare and education costs
– Final expenses – like funeral costs
– Debt repayments
– Extended care costs – some policies having ‘living benefits’ to help cover your costs of care
The idea behind life insurance is simple: If something happens to you, your family will still have the financial support they need to maintain their lifestyle and cover important costs. It’s an act of love and security, ensuring your family will not have to struggle financially during an emotionally difficult time.
Who Should Consider Life Insurance?
You might think life insurance is only for certain people, but, it can benefit almost everyone, especially if you have dependents. If you fall into any of the following categories, life insurance should be a top priority:
– You have a spouse or children who rely on your income.
– You have significant debts (like a mortgage) that would be a burden on loved ones.
– You’re a stay-at-home parent, and replacing your contribution to the household would require additional income for childcare and other services.
– You’re a business owner who wants to ensure your company can survive without you.
– You want to leave a financial legacy or help with estate planning.
Debunking Common Life Insurance Myths
There are several misconceptions about life insurance that may keep you from exploring it as a viable option. Let’s clear up a few of the most common myths:
– “Life insurance is too expensive.”
Many people overestimate the cost of life insurance. The truth is, many policies are affordable, even if you’re on a budget. The younger and healthier you are, the cheaper your premiums will be, so it makes sense to explore your option sooner, rather than later.
– “I’m young and healthy, so I don’t need life insurance yet.”
Life insurance is easier and more affordable to obtain when you’re young and healthy. Locking in coverage now ensures you get better rates, and avoids the risk of developing health issues that could raise your premiums later on.
– “I get life insurance through work, so I’m covered.”
While employer-provided life insurance is a nice perk, it’s typically not adequate to meet your family’s needs. Plus, if you leave your job, you typically lose that coverage. Having your own policy gives you peace of mind no matter where your career takes you.
Types of Life Insurance: What’s Right for You?
There are different types of life insurance policies to consider, each with its own benefits. It’s important to choose the right one for your specific situation:
– Term Life Insurance
This is the most straightforward and affordable option. It covers you for a specific period, such as 10, 20, or 30 years. If you pass away during that term, your beneficiaries receive the death benefit. This type of policy is ideal for covering temporary financial needs.
– Whole Life Insurance
This policy lasts your entire life and also builds cash value over time, which can be accessed while you’re still alive. It’s generally more expensive than term life, but it offers lifelong coverage and acts as a financial tool for long-term planning.
– Universal Life Insurance
Universal life offers more flexibility than whole life. It allows you to adjust your premiums and death benefits and, like whole life policies, also builds cash value. It’s a good option if you want both life-long protection and a savings component.
Why Now Is the Time to Take Action
Life Insurance Awareness Month serves as a reminder to review existing policies, or procure initial life insurance coverage. Life changes, like getting married, having children, buying a home, or even starting a new job, often create new financial responsibilities which need to be protected.
Ask yourself:
– Has my family grown? Do you now have dependents who would need financial support if you were gone?
– Have my financial obligations changed? A new mortgage or increased debt could mean you need more coverage.
– Do I have enough coverage? Whether you have no policy or only rely on employer-provided insurance, it’s worth checking to see if your coverage would truly support your family in your absence.
Taking time this September to review your life insurance needs, and learn how this critical coverage could save you and your family from financial hardship in the future.
It’s About More Than Just Protecting Income
Life insurance isn’t just for income replacement. It can also be used for:
– Paying off debts, so your family doesn’t inherit them.
– Funding your children’s education so they can pursue their dreams, even if you’re not there to see them through.
– Final expenses – ensuring your loved ones don’t have to worry about the cost of your funeral or medical bills.
– Leaving a legacy – providing you the opportunity to make a lasting financial impact on your children or a charitable organization.
– Long-term care costs – some whole life policies offer ‘living benefits,’ so you can access your death benefit while you’re alive to help cover the costs of care associated with chronic or terminal illness.
During Life Insurance Awareness Month, take a moment to think about the future and the financial security of those you love. Life insurance is a simple, affordable way to ensure your family is protected, no matter what happens. Don’t wait for a better time—protecting your loved ones now is the ultimate way to show them how much they mean to you.
Reach out to an insurance professional or financial advisor today, and take the first step toward securing your family’s future. Life is unpredictable; your family’s financial stability doesn’t have to be.