Why is Life Insurance Important?
/Life Insurance Misconceptions
By Reece Oleson, CFP®, RICP®, CEPA
Director of Financial Planning
Life Insurance is an important financial planning tool. Life Insurance benefits can be designed to meet many goals, such as replacing income, paying off debts, or fully funding college. Let’s talk about three common misconceptions about Life Insurance:
1. I don’t need Life Insurance.
If your spouse or children’s lifestyle today or in the future would be negatively impacted without your income, Life Insurance can provide additional assets to support their lifestyle.
2. Life Insurance is expensive.
Term insurance is very cost-efficient. For example:
A 20-year term policy with a $1,000,000 death benefit for a 40 year old man at standard rates is about $100/month.*
A 20-year term policy with a $1,000,000 death benefit for a 40 year old woman at standard rates is about $80/month.*
At standard plus, preferred, or preferred plus rates, premiums are even cheaper!
3. I already have Life Insurance through work, so that should be enough.
Life insurance through employers is a good start, especially when you are younger, but isn’t generally enough to replace the insured’s income. Most employers only provide around $50,000 to 1 year’s salary of life insurance at no cost.
Many employers do allow you to purchase additional coverage, and it may be easy to purchase as it often does not require underwriting. It is likely more expensive than term life purchased on your own, especially for older workers as most premiums increase as you age, and you may not be able to get enough coverage to meet your needs.
Term life insurance is generally the most affordable life insurance option. It provides coverage when you need it and goes away when you no longer need it.
The money you save by purchasing term insurance can be used toward your other goals, whether that is a purchase for today or saving for tomorrow!
Contact Gilbert and Cook to analyze your life insurance needs & provide cost-efficient options to meet those needs.
*Source: TNBC term life insurance quotes for Iowa resident, 11/16/2022.
