Life insurance facts every family should know
September often brings a return to routine, renewed goals and a closer look at household finances. American Family Insurance encourages consumers who use this time to review budgets, savings plans and other financial priorities, to also take another look at an important part of their family financial plan: life insurance.
While many people insure their car, home and health against unforeseen events, they may not have considered the role life insurance can play in a family's financial future. Although it is not always an easy topic to discuss, life insurance can help financially protect loved ones in the event of a death.
Common life insurance myths
Life insurance is often misunderstood. Many consumers have questions about affordability, coverage needs and when to purchase a policy. Understanding the facts allows consumers to make informed decisions and helps ensure their coverage meets their needs to protect those who matter most.
Myth: Life insurance is too expensive
Fact: Life insurance may be more affordable than many people think.
Many consumers overestimate the cost of life insurance and may be surprised to learn that coverage options are available to fit a variety of budgets. The cost of coverage can vary based on factors like age, health, coverage amount and the type of insurance selected. When viewed as a way to help financially protect those who matter most, life insurance can be an important part of a family's financial plan. For those with dependents, life insurance may help provide financial support for expenses such as funeral costs, mortgage payments and outstanding debts.
Myth: I don't need life insurance because I'm young
Fact: Getting life insurance earlier in life can help provide protection before major life milestones occur.
Some young adults assume life insurance isn't necessary because they don't yet have children or significant assets. However, obtaining coverage while younger and healthier may provide access to more affordable premium rates than waiting until later in life. Life insurance can also help address debts, final expenses and future financial responsibilities, even before major life milestones occur.
Myth: Life insurance through work is enough
Fact: Employer-provided life insurance may not provide all the coverage your family needs.
Workplace life insurance can be a valuable employee benefit, but it may not fully address a family's long-term life insurance needs. Employer-sponsored coverage often doesn’t follow you if you change jobs. A personal life insurance policy can help provide protection that remains with you regardless of your employment situation.
Myth: I don't need life insurance anymore because my children are grown
Fact: Life insurance can continue to provide value during every stage of life.
Even if your children are financially independent, you may still have final expenses, outstanding debts or legacy planning goals to consider.
Myth: Life insurance is too overwhelming and there are too many options
Fact: Choosing life insurance can be simpler when you have the right guidance and resources.
Life insurance doesn't have to be complicated. Speaking with an American Family Insurance agency owner can help consumers understand their options and make informed decisions.
When should you review your coverage?
Life insurance is not necessarily a one-time decision. As life changes, your coverage needs may also change. Major life events can be a good reason to review your coverage and determine whether it still reflects your current needs. September is a good month to review your family’s specific needs and coverages.
Consider reviewing your life insurance coverage if you have recently:
- Married
- Welcomed a child
- Purchased a home
- Changed jobs or experienced a significant change in income
- Taken on additional financial responsibilities
- Begun caring for a loved one
If your circumstances have changed since you last purchased or reviewed your policy, it may be worth discussing your coverage needs.
Understanding your life insurance options
Once you understand the facts, the next step is finding coverage that fits your needs and goals.
- Term life insurance offers level premiums for a specific period, such as 10, 20, or 30 years, helping families replace lost income and maintain financial stability, including keeping up with mortgage payments and other ongoing expenses.
- Whole life insurance provides lifelong coverage with premiums that remain the same and builds cash value over time.
- Flexible life insurance allows policyowners to modify payments and coverage, subject to policy terms and conditions, offering greater flexibility to help meet changing financial needs throughout different stages of life.
Choosing the right life insurance policy is a personal decision that depends on your loved ones' needs, and your financial responsibilities and long-term goals.
Taking the next step
Consumers who are unsure how much coverage they need or which policy may be right for them can contact an American Family Insurance agency owner to discuss their options, estimate coverage needs and identify a policy that fits their circumstances. American Family also offers online resources and a life insurance calculator to help consumers evaluate their needs and explore some available coverage options.
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About American Family Insurance
American Family Insurance, based in Madison, Wis., has been serving customers since 1927. We inspire, protect and restore dreams through our insurance products, exceptional service from our agency owners and employees, community investments and creative partnerships. American Family Insurance is the nation’s 12th-largest property/casualty insurance company, ranking No. 226 on the Fortune 500 list. American Family has a current ‘a+’ credit rating through AM Best, and has distinction as a “Standing the Test of Time” company, which is represented by having an AM Best financial strength rating of ‘A’ or better for at least 75 years. The company offers American Family-brand products through a network of exclusive agency owners as well as nationwide through key strategic partnerships. American Family Insurance also includes Homesite and Main Street America. The company has approximately 10,500 employees nationwide.
Life insurance underwritten by American Family Life Insurance Company, 6000 American Parkway, Madison, WI 53783. American Family Life Insurance Company has an AM Best financial strength rating of ‘A’ (Excellent), the third highest of their 13 ratings; and an ‘a+’ (Excellent) long-term issuer credit rating, the fifth highest of their 21 ratings.