Seventy eight years. That's the average life expectancy for an American these days. You may be a long way off from that number, but that doesn't mean you shouldn't consider purchasing life insurance. A recent survey found that the number of US households with life insurance is at its lowest level in five decades. That's a missing safety net for millions, according to experts. Eleven million households with children under the age of 18 have no life insurance and its that group that some say need it the most.
No one likes to think about the day they expire, and life insurance can bring up those thoughts. But that's actually not the main reason for avoiding the purchase. According to USA Today, more than 40% of families haven't bought life insurance because it doesn't fit into their budget. If this is your reason, think of the alternative. If your spouse died would you be able to pay all of your bills without the help of life insurance?
A recent poll found two in five families with children under the age of 18 would have trouble meeting financial obligations if the primary breadwinner died.
Edward Jones financial adviser Johnnie Hall says it's important to ask yourself a tough question, "If something were to happen to you would the people you care about be able to continue on in that lifestyle that you are providing for them?"
Should You Buy Term or Whole Life Insurance?
This is a topic debated by many—should you buy a term or whole life policy? A term policy means that when you die a certain sum of money will go to your benefactor. A whole life policy includes an investment component where you are also able to build cash value that you can borrow against. Hall suggests term policies to his clients but says, whatever option you decide, take into consideration who's selling it.
"I think you always need to ask someone 'how much are you making on this?' That's a very good question to ask," says Hall. "Insurance guys make more money on whole life policies. The premium is more so if your premium is higher the insurance guy makes more money."
If You're in Debt You Need Life Insurance
As soon as you start taking on debt—whether it's from buying a car or mortgaging a home—Hall says you probably need to add life insurance to your budget. That's because if something happens to you, your family could get stuck with your debt. Purchasing a life insurance policy that would not only cover your final expenses, but take care of your debt is the responsible thing to do.
If you decide to move forward with buying life insurance, then you need to look into getting a will as well. Without a will your estate can get caught up in probate court and working through the system can take 12 to 18 months according to Hall. Save your relatives the headache and have a clear plan for when you pass.
Price of Premiums Dropping
If you're considering buying term life insurance there's good news: experts say if you're healthy than term life insurance premiums are a bargain. The life insurance premiums are much lower than they were ten years ago.
And if you're young and healthy the protection is cheap according to Hall. Why? "Only one percent of term policies are used or funded in America," he says. "Insurance companies love healthy young people because they're probably never going to have to give them a dime." But if something does happen—you're covered.