According to a recent survey conducted by the research firm of Mathew Greenwald & Associates, many American breadwinners have less than half the life insurance protection they need to adequately protect their families in the event of death. According to the study, the average household breadwinner has enough life insurance to cover expenses for only four years after the loss of the breadwinner. However, eighty percent of the survey’s respondents stated that they are at least somewhat confident that they have enough coverage
According to the survey, the average breadwinner’s policy has a death benefit of $300,000. When asked how they would use the proceeds of a life insurance policy, the respondents’ first answer was typically to replace the breadwinner’s salary. Others indicated they would use the proceeds to fund retirement or pay for college expenses. However, when these costs were tabulated, the total life insurance necessary to cover these expenses came closer to $600,000, almost double the cost of the life insurance death benefit. Apparently, a wide gap exists between the perception and reality of what the correct amount of life insurance one should have to adequately protect one’s family.
How does one determine the correct amount of life insurance one should have so this gap won’t exist? Life insurance companies typically recommend anywhere from 10 to 20 time one’s gross income, depending on your age. A life insurance agent or broker can perform a needs analysis to help you come up with the right amount of coverage. Many life insurance websites, including www.LifeInsure.com have life insurance calculators to help you determine the appropriate amount of coverage you should have.