Life insurance can be an easier decision than many Americans are making it out to be. Some of the complexity of certain insurance products may make the conversation more challenging, but the age-old wisdom of “keep it simple” likely applies to the insurance needs of most families.
Generally, there are three key questions that members have on their minds when researching and acquiring life insurance:
How much life insurance do I need?
According to research from LIMRA, 35% of Americans would feel the financial impact of losing a loved one within the first month following the loss of their primary wage earner, and 50% would feel that impact within 6 months.1 Collectively, Americans are underinsured and one of the reasons cited in various studies is that consumers simply don’t know what to buy.
USAA believes that you should have at least enough life insurance to fully pay off any debts that you have as well as replace your income for at least 5 years. This should be a good starting point for most financial situations and should cover enough of the key considerations in your financial picture.
Insurance is not a one-time purchase, however; as your life changes, so do your insurance needs. We recommend reviewing your coverage on an annual basis to ensure that you are protecting your loved ones appropriately.
What type of policy type is best for me?
The biggest needs that typically make people think about life insurance - paying off the mortgage or replacing a wage earner’s paycheck - are best covered by term insurance. Term insurance provides a certain amount of life insurance benefit for a number of years (the term) and does not gain any cash value. For most individuals and financial situations, term insurance is likely the best product type to consider.
Many Americans, about 20%, only have life insurance that is offered by their employer; although convenient, may not offer enough coverage to adequately protect a family.1 Employer coverage often provides a fixed amount, like $50,000, or a multiple of your income, but they are typically not portable, meaning you could be without life insurance if you leave your job and don’t have a separate policy.
How much will it cost?
Life insurance is likely more affordable than you think. LIMRA research found that Americans overestimate the cost of a policy by five times the actual cost.1 Your insurance premium is going to largely be determined by your age and your health, so acquiring life insurance when you are younger and in better health can save you money over time.
It’s important to make life insurance part of your budget so you have peace of mind knowing that your loved ones and their lifestyle is protected. Today’s the day to find that peace of mind. Get additional information and a personalized quote for life insurance by visiting usaa.com/life or by calling a USAA life insurance specialist at 800-531-USAA.
Sean Scaturro MBA, CFP®
Advice Director, USAA
1 – 2019 LIMRA Insurance Barometer
Certified Financial Planner Board of Standards, Inc., owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNERTM in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
Life insurance and annuities provided by USAA Life Insurance Company, San Antonio, TX. All insurance products are subject to state availability, issue limitations and contractual terms and conditions.
DID# 263600 – 0919
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