Broker Check

Is Your Family Prepared if Something Were to Happen to You?

| September 11, 2023

September is Life Insurance Awareness Month. Talking about one’s mortality is never easy and it's often why important conversations about life insurance end up at the bottom of our “to-do” lists. Also, there is a lot of misunderstanding and misconceptions about who needs life insurance, how expensive is it, trying to figure out how much you might need, and understanding employer provided coverage vs. individual policies. Let’s dive into more detail about some of those misconceptions.

Misconception #1 – I Don’t Need Life Insurance

For some people, that may be true – they truly do not have a need for life insurance. Maybe they are young, single, with no outstanding liabilities. Others may have accumulated enough assets that they are able to “self-insure.” These may not be the best candidates for life insurance. However, as life progresses, most people will likely need life insurance at some point. Are you the primary breadwinner in your family? Do you have a mortgage or have you co-signed on any loans? Are you a business owner? Are you a stay-at-home parent? Are you concerned about estate taxes? The list goes on. Everyone’s needs are different, but life insurance can be useful in a lot of different situations and solve various financial needs.

Misconception #2 – I Cannot Afford Life Insurance

Term insurance or permanent insurance? Understanding the different types and costs of life insurance programs can be confusing and filled with industry jargon. That’s why it's important to work with a qualified professional who can discuss the pros and cons of various types of life insurance and help find a policy that suits your personal needs and fits your budget.

One of the biggest questions we encounter is: How much life insurance do I need? The answer is not an easy one because figuring out your life insurance needs can be highly subjective and can be very emotional for many people. So, developing an objective “needs analysis” is the best place to start in determining how much insurance and what kind of policy is suitable for you.  

Misconception #3 – I Have Adequate Coverage Through Work

Insurance coverage through work is a great benefit, and most large employers usually offer some sort of group life insurance coverage to eligible employees. Often these policies are 1x salary or maybe a little more and generally do not require employees to be approved for coverage as they would need to be if they bought their own individual policy. The problem with group coverage is twofold: 1) coverage provided through employers is usually not enough to meet most people’s needs and 2) group coverage generally is not portable. So, if you leave your job, you generally leave behind the life insurance benefit that came with it.

From a financial planning point of view, life insurance is a vehicle that can be a potential solution for a number of needs: replacing income; accumulating for the future; paying off debt; funding future education needs; providing for a long term care element in some policies; ensuring the continuation of a business. Not everyone has the same needs, and in some cases there is no need at all. We believe that doing an objective analysis is the only way to get a clear answer to what is right for you. Contact us today for a complimentary consultation to see if life insurance may be suitable for your individual situation.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA & SIPC. LPL Financial and Croxall Capital Planning do not provide tax or legal advice.  The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.