Reason #7 To Buy Life Insurance Now
Work coverage is likely insufficient
While health insurance is a common employee benefit, it’s not unusual to get life insurance at work, too.
The U.S. Bureau of Labor Statistics reports that three-quarters of full-time civilian workers are offered life insurance by their employers. The overwhelming majority of them take advantage of the benefit.
However, that work coverage usually isn’t adequate, Frederick says.
“Most employers give employees coverage equal to one to two times their annual salaries,” he says. “While this might be enough for someone who is single with no dependents, if you have a mortgage, young children or a nonworking spouse, you’ll need more than that.”
A common rule of thumb is that life insurance should provide seven to 10 times the insured person’s annual salary.
“But that’s just a starting point,” says Frederick. “From there, you need to get a full financial picture so you can dial in the right amount of coverage.”
Frederick looks at a variety of factors, including a client’s income, assets, liabilities and — perhaps most difficult to predict — plans for the future, such as for having additional children, or for retirement.