As we reflect on the experiences and events that will characterize 2020, one thing is for sure, life continues whether we are prepared for it or not. September is life insurance awareness month and we felt that we should address this important topic.  Let me remind our readers that although Atlas does not sell insurance products, we as financial planners recognize that risk management is a significant component of a solid financial plan. 

Along with changing habits and taking precautionary measures, current events have caused many folks to consider their own mortality. The big question we face in these scenarios is, “if I am not here will my family be secure?”  Whether you are part of a dual-income household, the primary breadwinner, or a stay at home spouse/partner, each of these roles provides an economic benefit to the household. If one of those roles is now unfulfilled due to a premature passing, an additional influx of cash may be needed to ensure the family can maintain their standard of living. This safety net is typically accomplished with a properly established life insurance policy. In 2019, it was reported that only 57% of adults owned a life insurance policy.^[1] Over the last decade, there has been a decline in life insurance policyholders. It is important to understand how life insurance can supplement a solid financial plan.

Some common mistakes I have encountered when discussing life insurance with individuals include…

1. Thinking  1 or 2 times a salary matched through an employer benefits plan will be enough for an individual’s surviving spouse and family to maintain their standard of living
   
2. Purchasing life insurance without completing a needs analysis, to accurately identify how much life insurance is needed which typically results in being over or under-insured
   
3. Waiting too long and discovering that a health issue may prevent them from obtaining life insurance or results in significantly higher premiums making it cost prohibitive
   
4. Not establishing the appropriate trust planning to protect minor beneficiaries who may inherit the proceeds of the policy

When reviewing life insurance policies, there are many factors to consider, including the type, term or whole life, and the amount of life insurance. Both factors will vary from household to household, and the decision will ultimately depend on an individual’s personal circumstances. These factors can include income(s), savings, reduced work hours, education goals, debt, childcare expenses, and the list goes on. In many cases, your group life insurance coverage through your employer benefits isn’t going to cut the mustard, so a plan should be discussed with your financial advisor to determine “how much is enough?”

If you have, or even have not, contemplated purchasing a life insurance policy, please contact your Atlas Wealth Management Advisor. It is never too soon to plan.
 
[1] https://www.bestliferates.org/life-insurance-statistics/