Do I Really Need Life Insurance?
Life insurance is a simple answer to a very difficult question: How will my family manage financially when I die? It’s a subject no one really wants to think about. But if someone depends on you financially, it’s one you cannot avoid.
There are many types of life insurance, but for all of them the bottom line is the same: They pay cash to your family after you die, allowing loved ones to remain financially secure. Life insurance payments can be used to cover daily living expenses, mortgage payments, outstanding loans, college tuition and other essential expenses. And, importantly, the death-benefit proceeds of a life insurance policy are almost never subject to federal income taxes.
If you’ve worked hard to establish a solid financial framework for your family—investments, home equity, a savings plan, retirement accounts—life insurance is the foundation upon which it all rests. It can guard against the need for your loved ones to make drastic changes to future plans when you die. Certain types of life insurance even have a built-in cash-accumulation feature that can help you reach savings goals.
Most Americans need life insurance, and many who already have it may need to update their coverage.
Life Events That Should Prompt You to Review Your Coverage
If someone depends on you financially, you probably need life insurance. Here are some examples of specific life stages or life events that might trigger the need for life insurance.
Married or Getting Married
Many families depend on two incomes to make ends meet. If you died suddenly, would your spouse have enough money to cover funeral costs, credit card balances, outstanding loans and daily living expenses?
A Parent or About to Become One
Raising a child is one of the most rewarding things a person can do in life. But it’s also one of the most expensive. If you died tomorrow, would your spouse or partner have the wherewithal to provide your children with the opportunities you always dreamed they’d have? From diapers to diplomas, would there be enough income to pay for daycare, a college education and everything in between? Even parents who don’t work outside the home need life insurance because they provide services that would be expensive to replace, such as childcare, transportation and managing the household. And what about single parents? They need life insurance more than anyone because their children rely on them for everything.
A Homeowner
If you’re like most people, your home is your most significant financial asset. Life insurance can be used to pay down or retire the mortgage, sparing your family from moving to a less expensive place to live. Plus, it can provide the funds needed to help family members maintain the lifestyle to which they’re accustomed.
Changing Jobs
If you’ve recently been promoted or changed jobs, it’s a good time to re-evaluate your life insurance coverage. Why? You may not realize it, but when your income rises, your spending tends to rise, too. Updating your life insurance coverage can help ensure that your family would be able to maintain its new and improved lifestyle if something were to happen to you.
Retired or Planning for Retirement
If your children are on their own and your mortgage is paid off, you might feel your need for life insurance has passed. But if you died today, your spouse or partner could outlive you by 10, 20 or 30 years. Would they have to make drastic lifestyle adjustments to make ends meet? Adequate life insurance coverage can help widows and widowers avoid financial struggles in retirement.
Single
Most single people don’t have a pressing need for life insurance because no one depends on them financially. But there are exceptions. If you’re providing financial support for aging parents or siblings, or if you’re carrying significant debt you wouldn’t want passed on to family members, you should consider life insurance.
Simple, affordable protection when it’s needed most
Life can be complicated. Getting life insurance to provide for your loved ones needn’t be. And with a Term Life1 insurance policy offered by Mosaic Group, and underwritten by The Chesapeake Life Insurance Company, it isn’t. There’s no medical exam required. No lab work involved. Just answer a few easy questions about your medical history. That’s it. You’re done. And typically your coverage will be issued within 1–2 days after your application is received and approved.2
Priceless protection isn’t pricey
For less than $20 a month, a 35-year old, who doesn’t use nicotine, can get a 10-year policy with $75,000 of coverage. Think about it. For less than the cost of a cup of coffee each morning, you can make sure your family finances are in order, providing peace of mind and stability at a difficult time. Plus, your monthly premiums stay level and do not change during the initial term period. From then on, premiums increase each policy year as shown in the policy.
Premiums are determined by these factors:
- Your age
- Length of term you choose: 10 or 20 years
- Amount of coverage you select: from $25,000 to $100,000
- Nicotine use
To see the amount you would pay, click on the Get a Quote link.
What is Term Life insurance?
It’s protection. It’s peace of mind that in the event of the insured’s death, Term Life insurance pays a lump sum of cash from $25,000 to $100,000, depending on the policy option you select.
Choose from these policy options3:
- 10-year Term Life – available to those ages 25–65
- 20-year Term Life – available to those ages 25–55
- $25,000, $50,000, $75,000 or $100,000 of coverage
Features and benefits:
- Immediately pays a non-taxed, lump sum up to $100,000 cash
- Premiums do not change for the initial term
- Can supplement any existing life insurance plan you have
- Convertible to Whole Life insurance4
- Renewable to age 95 (once initial term period expires)
Cash when the need is urgent
At no additional cost, your policy includes what’s called a Terminal Illness Accelerated Death Benefit. This allows you to receive 50% of the death benefit up front should you be diagnosed with a terminal medical condition and given a life expectancy of 12 months or less. It can help ease the burden of medical costs and enable you and your loved ones to focus on what’s most important– your care and your time together.5
Optional coverage
For added protection, and additional cost, you have the option of supplementing your policy with the following coverage:
- Critical Condition – get paid coverage amount in lump sum if you are diagnosed with a critical condition such as a heart attack, stroke or coma6
- Accidental Death – doubles the death benefit if the insured’s death occurs within 180 days after, and as a direct result of, an injury7
- Waiver of Premium – in the event you become totally disabled, your premiums can be waived8
1 The Convertible Term Life insurance policy offered is a Simplified Issue product.
2 Subject to underwriting.
3 Available in North Carolina only.
4 Form series ICC11-CTL-11. The policy is non-participating.
5 See form ICC11-TIAB-11 and the disclosure for the Terminal Illness Accelerated Death Benefit, ICC11-TIABD-11, for details.
6 Critical Condition Accelerated Living Benefit Rider available with 10-yr term only. Coverage based upon the first occurrence of a qualifying event as shown in the policy. Form CCAB 11/11 NC.
7 Accidental Death Benefit Rider form ICC11-CTLAD-11.
8 Waiver of Premium Rider form ICC12-CWOP-12.
How Much Life Insurance Do You Need?
The most important part of buying life insurance is determining how much you need. Since everyone’s financial circumstances and goals are different, there is no rule of thumb to tell you how much to buy.
But do you really need $250,000, $500,000, $1 million or more? Sounds like a lot of money, but imagine if one of those amounts had to pay for a funeral, retire credit card balances and other debts, and support your loved ones for many years to come. Would it be enough? How would you know?
To start, estimate what your family members would need after you’re gone to meet immediate, ongoing, and future financial obligations (see right for examples of each). Then, add up the resources your surviving family members could draw on to support themselves. These would include things like a spouse’s income, accumulated savings, life insurance you may already own, etc. The difference between the two is your need for additional life insurance (see below).
This mathematical equation may seem simple enough, but coming up with all the inputs can get tricky. Plus, you’ll need to factor in the effects of inflation and assumptions about how much your investments will earn over the long run.
Life Insurance Needs Estimator
Term Life Insurance Premium Indicator
Life and Health
