5 Common Sense Approaches to Adequate Life Insurance Coverage

A Recent survey released by LPSOS global research firm and conducted on behalf of ING polled American responses regarding events that would have an extremely negative impact on a family's financial security and longevity. The survey revealed that out of 15 different scenarios the two that topped the list were "fraud or identity theft resulting in your loss of savings or assets", and "your death or the death of a spouse or partner".

71% of Participants Surveyed Claim to Have Life Insurance: However, a LIMRA survey determined those same insured adults are more likely to have only a group life insurance policy obtained through their employer and were only covered by the smallest amount of life insurance. In fact 56% of married adults with children believe they are inadequately insured. These studies clearly show Americans are aware they need insurance when questioned but are uncertain about how much they actually need and honestly admit with regard to obtaining it that they "just never got around to it." and "are uncertain how much life insurance we need".

Simple Steps to Insure Adequate Coverage During the Stages Of Life

Life Insurance When you are single: Your need for life insurance is really not crucial as a single adult. Just like homeowners, renters or auto insurance the sole purpose is to protect against the risk of a catastrophic loss and in the event you passed away as a single adult with no dependants or major liabilities; your passing would not create a financial burden for others.

Life Insurance for recently married couples: This is usually a time when two adults should consider your life insurance needs. At this stage of life newlyweds are typically starting working careers and acquiring joint liabilities such as a home and other debts. This can be completed by analyzing any coverage you may have with your employer and then supplementing that with either an inexpensive term life policy or mortgage protection insurance policy which may include additional mortgage payment riders for short term disability typically covering your mortgage payment for up to 24 months. Disabilities account for a larger percentage of hardships than death. If you do not yet have children then simply enough to cover your biggest obligations should be sufficient. Term and mortgage life provide the most affordable options for young and healthy individuals.

 Life Insurance and a Growing family: As you family grows you will definitely need to reevaluate your current coverage. You may have already placed a policy on you and your spouse at this stage, but with a growing family this is when you may be most vulnerable. If one of the income earners were to die the strain on the remaining spouse could be devastating financially. Even adding a shorter term policy for 10 or 15 years to your current coverage would be smart until your children have become financially independent. This is an excellent way to insure you or your spouse and children are well protected.

Employment, Career and or Spousal Changes and Life Insurance: Your employer sponsored plans may be canceled when you leave that job.  Just like employer health insurance you may need to review your policy and either obtain group coverage at the new employer or increase your current supplemental coverage. Other reasons to review your coverage may include starting your own business, divorce, new marriages, hazardous occupation changes, quitting smoking or when one of the spouses stops working to care for children. All of these could affect the amounts of coverage needed, the cost incurred or the beneficiaries.

Life Insurance and the Golden Years: This is time to evaluate perceived needs. If seniors have already adequately planned for retirement they may need little if any insurance since their children are grown. Whole life policies can be a good choice for small amounts of coverage for seniors who may feel the need for some additional protection to cover special circumstances such as final expenses, burial, assisted living, long term care needs and provide income to the living spouse if the two were on a fixed income. Whole life can be purchased in small amounts without a medical exam for seniors who may have health conditions or are too old to qualify for term coverage. If policies are purchased early enough in the retirement stage the money can potentially accumulate cash value that could be borrowed in an emergency situation or simply serve as a living benefit income stream.

The 5 stages are simply a guide ,most importantly remember to take a look at your coverage to survey the risk of loss and if you have dependents and liabilities and the impact of death or disability would cause a great hardship then you need life insurance. Pick a coverage amount that is reasonably within your budget even if it is less than ideal