In a new alarming survey from LIMRA as reported by USA Today, the percentage of households in the US that have life insurance coverage is at the lowest level in 50 years.  According to the report, only 44% of households own a life insurance policy that is not provided by an employer, and 30% have no life insurance at all.  Even more alarming is the statistic that in families with children under 18, the percentage that own life insurance has dropped from 90% in 2004 to only 77% in 2010.  Many families have lost much of their retirement savings and been hit hard by the economy, which means more people than ever need life insurance to replace what was lost.  

Term life insurance rates are at their lowest level in years and even among the families who own life insurance, many are underinsured.  This was mentioned in a previous blog ($1 Million Isn’t What it Used To Be), and most families are not sure how much life insurance they need to pay off debts and replace the lost income of the breadwinner (or cover the cost of childcare when a stay-at-home spouse passes away).  The LIFE Foundation has a very useful life insurance needs calculator to determine approximately how much life insurance coverage is needed to keep the financial outlook of the surviving family stable.   

As an example, let’s assume a 35 year old is married, has two children he wants to put through college, a $250k mortgage, $10k in other debt, and wants to provide $60,000 per year income for 40 years to the surviving spouse if they were to pass away.  Assuming a 6% interest rate (unlikely in today’s environment) and 3% inflation, this person would need approximately $2,000,000 of life insurance to accommodate their wants/needs if they were to pass away tomorrow.  If we assume a 3% interest rate (more likely in today's low-interest environment), this person would need $2,900,000 of life insurance.  These numbers are a far cry from the amount of life insurance that most individuals have, where most people consider $250,000 or $500,000 “more than enough” coverage.

Take a few minutes, try out the needs calculator, then click the banner at the top or bottom of the page for an instant life insurance quote to see the approximate cost of securing your family’s financial future.  You can also give us a call at 1-800-571-2980 if you have any questions or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .