Insurance for ABA Members: How Much Life Insurance Do I Need?
Insurance for ABA Members: How Much Life Insurance Do I Need?
Lawyers and the public at large generally agree that life insurance is an important part of providing financial security for one’s family. The 2014 Insurance Barometer Study by LIMRA and Life Happens found that 80% of adults said they believe most people need life insurance.
But New York Life’s 2013 Life Insurance Gap Survey found that most people have significantly less coverage than they say they would need after the loss of the primary wage earner.
According to the survey, Americans’ perception is that they want their life insurance to last 14 years beyond the primary wage earner’s death, and 60% believe they have enough life insurance coverage. In reality, Americans have coverage that will last only three years beyond the primary wage earner’s death and only 20% have enough life insurance to meet their stated needs.
The gap between the median amount required to cover self-reported needs and the median amount of coverage respondents have is just over $300,000. The average respondent has only 41% of the coverage he/she said would be needed.
How Much Coverage is Right for My Family?
The primary purpose of life insurance is to provide for your loved ones’ needs when you would no longer be able to provide income and assistance as you do now.
Determining the right amount of insurance coverage requires a clear look at your household’s income and expenses now, and thinking through how they would change in the event of your death. The right amount of insurance is enough to cover their:
• Immediate expenses, such as your funeral costs, credit card debt, etc.
• Ongoing expenses – income (replacing your income)
• Future goals like college tuition or retirement
The lifehappens.org insurance needs calculator lays out the calculation through interactive steps, and can be very helpful in determining how much coverage might be necessary to ensure your family’s continued financial well-being in the event of your death. A financial advisor may be appropriate for someone with a more complex financial situation.
If your analysis shows that you should add to your coverage, consider one of the ABE-sponsored life insurance plans. ABE-sponsored life insurance* is affordable life insurance for lawyers with a unique charitable giving feature that allows you to give back to the good works of the legal profession. Although not guaranteed, available dividends donated to ABE help support over law-related 200 research, educational and public service projects, including those of the ABA Fund for Justice and Education (FJE) and the American Bar Foundation (ABF). In addition, donating available dividends makes you eligible for a charitable contribution deduction on your tax return.
Download ABE’s free Ebook, What Type of Life Insurance is Right for Me?, or contact your ABE Insurance Plan Specialist to talk through your options.
*Underwritten by New York Life Insurance Company, 51 Madison Avenue, New York, NY on 10010 on Policy Form GMR. This Information is courtesy of New York Life Insurance Company, used with permission. It is intended exclusively for general information only. All ABE-sponsored plans are group insurance plans, meaning coverage is issued to an ABA member under a Certificate of Insurance. It is not provided under an individual policy, nor is it employer/employee insurance. Plans may vary and may not be available in all states.
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