Are you inadvertently putting your loved ones in danger?<\/p>\n
Millions of Americans lack enough\u2014or even any\u2014life insurance. Are you one of them?<\/p>\n
A recent study revealed that life insurance ownership recently hit a 50-year low\u2014and that 35 million households don\u2019t have any life insurance at all. This means that the death of an income earner could be as financially catastrophic as it is sad.<\/p>\n
Behind this trend is a serious misperception about how much life insurance really costs. On average, people think it\u2019s three times more expensive than it really is<\/span><\/a>. (In reality, life insurance has never been more affordable<\/span><\/a>.)<\/p>\n While anyone can lack an adequate amount of life insurance, seven groups are especially likely to be under- or uninsured. Here\u2019s who they are and why they skimp on the life insurance they and their families need.<\/p>\n 1. Single parents<\/strong> \u201cSingle parents tend to be extremely busy since they\u2019re singlehandedly balancing work and family,\u201d says Greg Wieser, director of strategic marketing at Erie Insurance. \u201cAnd without that second income, money is often stretched tight.\u201d This creates a classic case of penny wise, pound foolish; while they\u2019re saving money in the short term, they\u2019re running the risk that their kids would have no means of support if they were gone.<\/p>\n 2. Parents who both work<\/strong> 3. Stay-at-home moms (or dads)<\/strong> 4. Homeowners<\/strong> 6. People with a history of minor health issues<\/strong> Even if you don\u2019t fall within any of these groups, you and your family could still lack the life insurance you need.<\/p>\n
\nSingle parents often go uninsured because they think that buying life insurance requires a big output of time and money\u2014two things they have in short supply.<\/p>\n
\nWhen both parents work, the parent making less money often discounts his or her contribution to the family. This is especially true when one parent works part time in order to hold down the home front. \u201cThere are many things a lesser earning spouse does that have no dollar value associated with them, like cooking or child care,\u201d says Wieser. \u201cIf something happened to that person, the surviving spouse often has to hire extra help or take on extra work to make up the lost income.\u201d<\/p>\n
\nResearch shows that a stay-at-home parent<\/span><\/a> contributes $112,962 annually in the form of child care, cleaning, home maintenance, transportation, cooking and more to the family\u2019s bottom line. These are costs that a life insurance policy\u2014not a surviving parent\u2014should cover if a stay-at-home partner passes away prematurely.<\/p>\n
\n\u201cIf a person dies and there\u2019s no life insurance to pay off the mortgage, the surviving family members may be forced to move,\u201d explains Wieser. It\u2019s hard enough to lose a loved one\u2014you certainly don\u2019t want your family to also lose their home, their school district and their neighborhood because there\u2019s no life insurance policy in place.
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\n5. Business owners<\/strong>
\n\u201cNew business owners often forgo life insurance because they think they don\u2019t have enough money available,\u201d says Wieser. Or a business may have had enough insurance, but has since grown. \u201cA more established business usually needs higher limits to be adequately insured and have a plan in place to guarantee succession of the business,\u201d Wieser says. Life insurance and a buy-sell agreement<\/span><\/a> will let the show go on if one partner dies.<\/p>\n
\nMany people confuse life insurance with health insurance. \u201cThey think they won\u2019t be eligible if they have high blood pressure or high cholesterol,\u201d says Wieser. \u201cIf your health concerns do not affect your mortality, you can still get life insurance at a reasonable rate.\u201d
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\n7. People whose employer provides group life insurance<\/strong>
\nThis group often has a false sense of security. While they have coverage, it often isn\u2019t enough. \u201cA typical group life benefit is two times your annual salary, but you may need more like six to eight times your salary just to break even,\u201d says Wieser. Also, employers can (and do) terminate group life insurance benefits. (This is especially common during a sluggish economy.) Another downside is the fact that you lose this coverage when you leave your employer.<\/p>\n