Most Americans think life insurance is important, but they prefer to do almost anything else than spend time figuring out how much insurance they need. Many would instead visit a Department of Motor Vehicles (DMV) office, have a root canal or babysit sextuplets than determine their life insurance coverage needs, according to a survey from the Life and Health Insurance Foundation for Education (LIFE).
Three out of four study participants agreed that life insurance is necessary. However, instead of examining their life insurance needs-
- 47% would instead go to the DMV to renew their driver’s license.
- One in five would prefer to go to the dentist for a root canal.
- 15% would prefer to babysit sextuplets.
- 11% would instead be stuck on a New York City subway without air conditioning.
Because so many Americans seem to find assessing their life insurance needs so distasteful, the LIFE Foundation has developed the following strategy to make the process less painful:
- Determine how much-Begin by considering who depends on you financially, including your spouse, children, and other loved ones. Then decide how much money these individuals would need to maintain their current lifestyle and to fund plans if they die. If you’re a stay-at-home parent, you’ll need to figure out how much it would cost to replace the daily services-child care, shopping, cooking, cleaning, etc.-you perform. Then subtract that amount from your existing income and assets to determine the proper coverage.
- Decide what kind of life insurance coverage comes in different forms, including term and permanent. To decide which type best suits your needs, consider factors such as how long you will need the coverage, how much you can afford, the degree of risk you can tolerate, and the amount of financial flexibility you need.
- Get professional help-Once you’re ready to purchase a policy, work with an insurance agent to complete a thorough analysis to ensure that you have identified all your needs. Three-quarters of American households do not have a personal life insurance agent so that they may take chances with their family’s financial future. If you don’t have an insurance agent, get a recommendation from your family or friends.