Personal Finance Essentials
Life Insurance: Protecting Your Family’s Financial Future
Americans face significant financial risk when they don’t have adequate life insurance.
An untimely death can leave families struggling with lost income, mounting bills and financial devastation – not just grief. If you think losing a loved one is the worst thing that could happen to your family, consider this: the worst thing that can happen is losing a loved one and then discovering that, as a result, your children can’t go to college or you can’t keep your home. Dealing with bill collectors while dealing with grief is far worse than dealing with grief alone.
Life insurance is a crucial financial safety net that ensures your loved ones are protected if something happens to you. Without proper coverage, your family could face:
These aren’t remote possibilities. The average wife in America becomes a widow at age 54. People die at unexpected ages, and the financial consequences for those left behind can be severe and long-lasting. When you die, your family might receive a few casseroles from well-meaning neighbors – but that’s about it. No benefit concert, no fundraiser. Just your family, facing financial reality without you.
And yet, according to the American Council of Life Insurers, the average American household carries only $165,800 in life insurance coverage. Based on the formula described later in this page, that’s enough to generate just $8,290 per year in income for surviving family members. For most families, that simply isn’t enough.