Introduction:
Life insurance is a vital part of financial planning for every American. As the economy continues to improve and unemployment continues to drop, it's becoming more clear that everyone needs some type of life insurance. To help you understand why life insurance is such a valuable financial tool, we want to share with you some statistics on the importance of life insurance and why it should be part of your financial plan.
Life insurance, for many Americans, can be intimidating. In fact, most people don't even know where to start when purchasing life insurance. This article is written to help readers begin to understand the basics of life insurance and also how they can put their life events into context with their financial plan.
The Average American Family is Losing Ground.
The average family of four, as a whole, is losing ground financially every year. As you can see from the chart below, we are not just talking about the income loss in terms of dollars and cents (although that's certainly a part of it). We're talking about the overall trend of income loss over time.
Keep in mind that this data is from 2012, so it's more recent than most people are likely to have access to. If you do have access to this data and want to dig deeper into it, I recommend reading "The Decline of the Middle Class" by Joseph Stiglitz. It's an excellent article and covers much more ground than I've been able to cover here.
If you'd like to learn more about life insurance in general, I recommend reading this post by my friend Jeff Keller at Life Insurance for Dummies. He does a great job explaining why life insurance is important for everyone who needs it and how it works underneath all these numbers!
Life Insurance is Better Than an Investment.
Life insurance is a type of insurance that pays a benefit to beneficiaries upon the death of the insured person. The sum of money paid as a result of death depends on the type and amount of coverage purchased.
The main reason why people prefer life insurance over investment is that it offers them better returns on investment than they can get from other forms of investments such as stocks and bonds. Life insurance policies also offer tax advantages that are not available in other types of investments. This means that you can benefit from both income tax deductions as well as capital gains tax benefits at the time when your policy matures or when you sell it.
Also, since you will be receiving payments in case your loved one dies, this will help you maintain financial stability during the most difficult times in your life.
The Average American Just Doesn't Have Cash To Spare.
The average American family is barely surviving on their income. According to the U.S. Census Bureau, in 2016, the median household income was $59,039 per year. That means half of all households in the United States earned less than that amount — and more than half had no savings or investments to speak of at all.
You can imagine how much this has to do with how many Americans have a job at these days, and how much it takes for them to make ends meet. This is why a lot of people are turning to life insurance policies as a way to protect their families from financial hardship if something were to happen to them or their spouse overnight — which unfortunately happens more often than we'd like to think about it!
Life Expectancy for Americans is increasing
Life Expectancy for Americans is increasing. As a result, more people are reaching the age where they will need life insurance. This means that more people are reaching their golden years and are looking for ways to protect their family's future.
Life insurance can be used to cover many different situations. For example, you may have children or grandchildren who depend on your income, or perhaps you have a mortgage and other debts. Life insurance can be used to cover these expenses in case of your death.
Life insurance can also be used as an investment tool for retirement income or tax-saving purposes. Those who invest in term life insurance policies could get an interest rate equal to either their state's minimum wage or the average interest rate paid by banks on savings accounts.
Conclusion
If you're tempted to just get some peace of mind and carry no life insurance, we hope we've been able to show you why that's a bad idea. Under certain circumstances, it might make sense. But those circumstances aren't common, and they usually don't come up. If you think everyone with life insurance deserves it, go buy some. You'll thank yourself later on.
Life insurance is a complicated subject, and what you need to do will depend on your own personal situation. But hopefully, this article can serve as a helpful starting point—and even if you don't end up carrying life insurance, at the very least, consider having a small amount just in case.
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