When it Comes to Life Insurance, Start With “Why?”

$15 trillion is a big, scary number. No, it’s not the United States’ national debt. It’s the amount of financial needs left uncovered by Americans who don’t have adequate life insurance protection. Considering that 43% of us have no life insurance at all, most households face a staggering level of financial risk.1

When trying to understand a complex problem, we should start with “why?” So, why do you need life insurance? No matter how you look at it, the answer lies in wanting to protect the people you love so that your death doesn’t become a financial burden.


How much insurance do I need?

USAA uses the acronym L.I.F.E to demystify life insurance needs:


  • Liabilities—Coverage should fully pay off all debts.
  • Income—Coverage should supplement or replace at least five years of after-tax income.
  • Final expenses—Coverage should include final medical or funeral costs.
  • Education costs—Coverage should offset school or college expenses.


Add up all those figures and then subtract the amount of life insurance you privately own, and/or assets your family has already saved for these expenses. The net amount is your basic need for additional life insurance.


What type of insurance is right for my situation?


It varies from family to family, but typically you’ll need a combination of term and perm coverage. While you’re young and your needs are high, the majority of your insurance should be term. As you get older and more financially secure, your temporary needs likely will decrease, and you’ll want life insurance to help your family achieve wants, dreams or wishes.


If having a combination of insurance types exceeds your budget, it may be best to get the right amount of term coverage today and convert to a permanent policy later in your life. Conversion benefits help you continue all or a portion of your coverage in a permanent policy without having to prove insurability in the future. This is a great resource to ensure that your insurance plan adapts to the changes in your overall financial plan.


If you are one of the many Americans who are under-insured or uninsured, take action today to be your family’s protector.



‎09-12-2016 07:10 AM

Content provided courtesy of USAA.

By Sean Scaturro

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