Insurance is one of the biggest industries in the world — right up there with fast food, transportation, and electronics. It makes sense when you consider all the different coverages that are out there: auto insurance (which would include motorcycle insurance, motorhome insurance, boat insurance, etc.), term life insurance, renter’s insurance, home insurance, disability insurance, health/dental/vision insurance — you can take out a policy on your jewelry, your dog, or even a particularly nice piece of furniture if you’re willing to pay the premium.
But let’s talk about life insurance. The difference between term life insurance and whole life insurance is that term life insurance pays a death benefit in the event that the insured person dies in a specified period of time. If you’re reading this, you probably didn’t know the difference because Americans are not particularly knowledgeable about life insurance.
How much do you think life insurance costs? Throw out a number. Do you have life insurance? What percentage of people do you think have life insurance in the United States?
People without life insurance think that it’s about three times as expensive as it actually is, according to the Insurance Barometer Study of 2015. Similarly, millennials overestimate the cost by an average of 215% when compared to actual life insurance costs. This makes sense when you find out that, according to the Barometer Study mentioned above, only 57% of Americans were covered by some type of life insurance (either full or term life insurance) as of 2015.
With about 40% of Americans not having life insurance, it’s important to look at who these people might be. A 95 year old widower probably doesn’t need life insurance, as they are statistically more likely to die soon than a 25 year old parent of two. Shockingly, almost 40% of parents with children under the age of 18 do not have life insurance. If the parent were to pass away, the children would lose the entirety of the income brought in by that parent. That would be a devastating financial hit in addition to the incomparable emotional toll of losing a parent.
Life insurance is there to help in these kinds of difficult situations. It’s no fun to think about death, so it can be hard to think about life insurance. But sometimes in life we have to make hard decisions and think about difficult things. Your family would be better off if you had a policy.