Why Life Insurance Is Gaining Popularity

• COVID-19 has driven increased awareness, with policy sales up 11% in early 2021.

• Many Americans recognize life insurance as a financial safety net for loved ones.

• Younger generations, especially millennials, are taking steps to protect their families.

Coverage Gaps and Misconceptions

• Coverage Decline: Only 52% of adults report having life insurance, down from 63% in 2011.
• Employer Insurance Issues:
• Limited to 1–2 times your salary.
• Coverage often lost when changing jobs.

How Much Coverage Do You Need?

Skip Rules of Thumb: Instead of 10–15 times your income, base the amount on:
- Future childcare, education, and eldercare costs.
- Debts (mortgage, credit cards) .
- Medical expenses and emergency savings.

Adjust for Inflation: Factor in rising costs over time.

Affordable Options: Term Life Insurance

Why Choose Term Insurance?
- Simple and cost-effective. - Fixed premiums and death benefit during the term.
- Maximizes cash flow for other financial goals (e.g., college or retirement).

Cost Example:
- A 35-year-old nonsmoking man pays $252/year for a $500,000, 20-year term policy.
- A woman of the same age pays $216/year for similar coverage.
- Costs rise with age; a 55-year-old man might pay $2,664/year for $1 million coverage.

Employer Coverage vs. Private Plans:
- Employer plans may be limited and costlier than private options—shop around first.

Considerations for Cash-Value Insurance

What It Is: Combines a death benefit with a savings or investment account.

Higher Costs:
- A 35-year-old man may pay $4,488/year for a $500,000 whole life policy vs. $252/year for term.
- Requires long-term commitment to build value.

When It’s Worth It:
- For estate planning, providing for grandchildren, or special-needs dependents .
- After maxing out tax-deferred accounts like a 401(k) or Roth IRA for growth and flexibility.

Summing it up

• Term life insurance is a cost-effective choice for most families.
• Customizing coverage to specific financial needs ensures better protection.
• Consult a fee-only financial planner for unbiased guidance.

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