Do you have enough life insurance coverage?

Ensure your family has the financial cushion they need if something happens to you. Find a life insurance policy that fits your needs by visiting Credible today. (iStock)

In 2020, most Americans (54%) owned life insurance, up from 37% in 2019. Of the Americans who didn’t own a policy, the majority said the coverage was just too expensive, and many said they felt they didn’t need it, according to Statista.

No matter if you have life insurance through your employer or you’ve purchased an individual plan, you may not have enough coverage to protect the ones you leave behind. But how much is enough?

Is it worth buying life insurance?

Because of the death rate from COVID-19, a survey by LIMRA found that 6 out of 10 Americans are now more aware of the need for life insurance, and 29% said they would likely buy a policy within the next 12 months.

If you’re self-insured—which means you have substantial savings or investments and are entirely debt-free—you might not need life insurance. Otherwise, if something unexpected happens to you, your family may need a financial cushion to stay afloat. Do a life insurance calculation and compare insurance quotes. If you're still unsure if buying life insurance is worth it, visit Credible to explore all of your life insurance options.

At what age should you get life insurance?

You can get life insurance at any age. But when you’re young and just starting out, it may not be a priority. There are several reasons why it makes sense to get coverage as soon as possible.

Retirees or older adults without dependent children may already have insurance in place. If not, buying a new policy may not make sense as the death benefit doesn't always outweigh the premiums’ cost.

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What are the types of life insurance?

There are several types of life insurance. The most common include:

  • Term
  • Whole life
  • Group life
  • Universal life

Each of these types of life insurance falls under either term life insurance or permanent life insurance. Term life insurance covers a specific number of years, whereas permanent life insurance lasts your entire life.

  • Term: This can be the cheapest way to buy life insurance. Policies are usually sold in 1, 5, 10, 15, 20, 25, or 30 years. Coverage amounts vary depending on the policy. 
  • Whole Life: Whole life insurance can cost more overall than term coverage, but it covers you for your entire life, the rates stay the same, and it builds cash value. 
  • Group Life: Your employer offers this as part of the company’s benefits package. Rates are based on the group rather than on each individual. 
  • Universal: There are several types of universal life insurance—guaranteed, indexed, and variable. Generally, your premiums won’t change. 

If you’re unsure which type of insurance best meets your needs, visit Credible to compare all of your options.

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How much does life insurance cost?

Life insurance costs vary and usually depend on the type of policy, age and overall health, and the death benefit amount.

For example: On average, a $500,000 term life insurance policy for a 30-year-old male might cost $227 per year, whereas a whole life insurance policy might cost $4,015 per year.

That same term life policy for a 30-year-old woman would cost $193 per year or $3,558 per year for a whole life policy.

For a 50-year-old male, a $500,000 term life policy would be $842 annually and $9,432 per year for a whole life policy.

Some policies also allow you to buy additional coverage later in life at rates based on your health when you initially purchased a policy. That’s a major benefit if you develop health issues down the road. Not sure which policy fits your needs? Visit Credible to explore all your options.

Within the life insurance niche, the general guideline for how much life insurance is enough states you should have a policy that is about 8 to 10 times your salary. But premiums can be costly, so shopping around and comparing insurers just makes sense. When you’re ready to get the most out of your life insurance policy, visit Credible to explore all your options in one place.

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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