A recent Nationwide Financial survey found that 49 out of 50 consumers who are married or partnered or who have dependents lack enough coverage to replace their income, Vaughan says. The average consumer is expected to earn $1.5 million before they retire, yet currently holds only $300,000 in life insurance coverage. “The reality is that many Americans are not even in the right ballpark when it comes to having enough life insurance.â€
Adds Vaughan, “The good news is that an affordable solution may be available. Consumers surveyed said they are willing to pay $99 per month on average to ensure that their family can maintain its standard of living indefinitely following the death of a breadwinner. For this amount, a healthy 35-year-old man can purchase a 20-year term life insurance policy worth more than $1.6 million, and a healthy 35-year-old woman can purchase more than $1.9 million in coverage.â€
Term life insurance covers a specific length of time (the “termâ€) and is relatively low cost. Permanent life insurance costs considerably more, but provides enduring protection with the potential to build cash value, money from which you can borrow during your lifetime.
Consider buying your own life insurance to augment employer life insurance benefits.Â “If you lose your job, you potentially lose your life insurance. A new job won’t necessarily offer the same life insurance benefit that your previous job had. Having personally owned life insurance ensures that your family is taken care of, whether or not you lose your job or if you decide to change jobs,â€ says Prudential’s Cooper.
Baby boomers—those born between 1946 and 1964—should regularly assess their life insurance needs and ask themselves the following: Where am I today? Does my present coverage meet my current needs? Different life events and your current life stage could influence not only the amount but the type of life insurance you need, says Anna Bryant, public affairs specialist at State Farm. She says as baby boomers near or enter retirement, their needs and financial objectives will change. They should ask themselves if their current life insurance coverage will adequately protect their family and their accumulated assets well into the future. Other questions to ask include, is my current plan consistent with my changing financial objectives and goals? What options are available to me should a change or an update be needed?
“Baby boomers should periodically review and re-evaluate their overall financial goals and objectives to ensure that their life insurance options are helping to protect and meet their goals,â€ Bryant says. “As your life changes, so too will your life insurance needs. Life insurance is a key component of a sound financial plan.â€
Meeting the Multigenerational Challenge
When it comes to life insurance planning, Cooper, 42, can speak from personal experience. “I didn’t really think about getting life insurance until my son was born,â€ he admits. “It really hit me that I’m responsible for this little guy. I want to make sure he’s taken care of, whether I’m alive or not.â€
Cooper’s own parents, who are 68 and 70, are helping to care for his aging grandmother. They also have other adult children as well as college-age grandchildren. Should something happen to his parents, Cooper says $600,000 in life insurance coverage ($300,000 each) is in place to provide financial resources for their beneficiaries. “We can’t replace people physically, emotionally, or spiritually, but we can help replace them financially,â€ says Cooper.
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