Fifty-two percent of Americans have life cover, with an average of $178 150 per person held. Interestingly, most insurance policies are taken out between 35 and 45. This is when people are pretty well established and have disposable income. So the question is, why do so many people not have life insurance?
According to the Insurance Information Institute, Americans consistently overestimate the cost of term life coverage, citing that “Half the population estimates the cost of life insurance at more than three times the actual cost.” This may have something to do with it.
But firstly, let’s take a look a why you need insurance.
The curveballs of life
Everybody, whether rich or poor, at some point or another, is faced with an unforeseen situation that has life-changing consequences. I call these the curveballs of life. That unexpected illness, that catastrophic car crash, that sudden and unexpected death. We are all familiar with the hardships of life.
Insurance is an effective way to plan as best we can for these curveballs in advance so that when the time comes, at least the financial aspect to the hardship is taken care of to a greater or lesser degree.
Curveballs all have financial demands, typically substantial needs. If you do not have access to these lump sums of finance when the proverbial pawpaw hits the fan, you can be set back for a long time and have to deal with both the catastrophe as well as the financial hardships that go with that – life can be challenging when this happens.
Paying a relatively small amount every month towards insurance policies will save you in times of need and make difficult times so much easier to deal with – for both you and your loved ones. However, remember that these events do not only affect you but tend to affect a whole circle of people.
Basic essential insurance for everyone
There are three, perhaps four main areas which you should insure. These apply to everyone and cover eventualities in three main areas.
Health insurance
Health insurance will cover your health costs for you and your family. Illness, disease, and hospitalization from accidents can happen at any time and can be devastating. Unfortunately, the price of medical care has become incredibly high. You cannot afford to be without this insurance if you want privatized top-quality health care for you and your family.
Life insurance
Life insurance will effectively provide for your family once you die and ensure that you do not leave them with debts.
Property insurance
Your home is typically your most valuable asset, and you spend an enormous chunk of your income on your home. To lose it and not recover the loss through property insurance would prove devastating to most people.
Motor vehicle insurance
A significant proportion of people own at least one, perhaps two vehicles per family. Although not as important as the three types of insurance listed above, it is a good idea to insure your cars. Accidents are so commonplace that there is a strong likelihood that your vehicle will be involved in an accident ranging from minor right through to a total wreck, so it is worthwhile insurance to have. If your car is totaled and you cannot afford to replace it, this can negatively affect your standard of living.
In summary
Insurance is not only essential, but it is also more affordable than you think. A good insurance broker is worth their weight in gold. Your insurance portfolio should ideally be part of your estate planning. For specialists in this field, take a look at https://www.insuranceandestates.com/. They will guide you in your estate planning strategy, including considering all the insurances you should have in place.
What did we learn?
