It might seem like a distant concept — putting money toward something that may or may not happen in the future, when you and your family have pressing financial needs now. But your spouse, child or even an aging parent probably depend on your work income. So what would happen if you were no longer around? That’s where life insurance comes in.
You might be asking yourself, how much life insurance do I really need? Or, what’s the right policy for my family and me? One of the easiest ways to get life insurance is through your workplace. Your employer has likely sifted through many different policy options for you, and put one (or more) on your list of benefits you can select during open enrollment this year.
As you think more about life insurance options through work, here are three things you need to know about this not-as-hard-as-it-may-seem benefit.
1. Most experts recommend a coverage amount seven times your salary.
According to LIMRA (a national association all about life insurance), experts recommend a coverage amount equal to seven years of your salary. So, if you’re making $70,000 today, you would want a policy of about $500,000. While this can seem like a lot of money, take into consideration that something that costs $1 today will likely cost almost $3 thirty years from now.
2. It’s easier to get coverage while you’re young.
It may sound obvious, but it’s worth a reminder not to put it off. It’s easier to get life insurance coverage while you are young and healthy. As you age, and if you encounter health issues, it will become more difficult and more expensive to get coverage. For what the industry calls “term” life insurance coverage, you can cover yourself typically up to a term of 30 years. If you’re looking at a “universal” (or permanent) life policy, your coverage will last for life. Also, as an added bonus, most universal policies include investment options that can supplement your 401K and help you save for the future.
3. It’s not only for parents or couples.
There’s a common misconception that life insurance is only for those that are married, planning to have kids or already have kids. But that’s not the case. Life insurance is also very valuable for those who are single. Think about it. If something would happen to you, who would pay the funeral costs? With the average cost of a funeral ranging between $7,000 and $10,000, it’s an important consideration. With life insurance, your family will be protected from financial hardship in the event something happens to you.
Though life insurance isn’t fun to think about – it’s incredibly important for you and your loved ones. Make sure to really take the time and think about if life insurance makes sense for you ahead of this open enrollment season at work.