Key Takeaways
- Life insurance applications increased dramatically during 2020.
- The largest jump in applications was for those under the age of 45.
- You may be surprised to find that term life insurance is relatively inexpensive.
COVID-19 has certainly affected a number of things, and one of those is an increase in life insurance applications, especially among those under the age of 45. According to nerdwallet, Americans in this age group were almost twice as likely to apply for life insurance last year than were those aged 45 – 59. It may be that the realities of COVID-19 caused a lot of people to consider how their loved ones would be cared for if they passed away.
If you’re in this age group, you may be wondering how to afford life insurance, especially if you recently purchased a house or are still getting a foothold in your career. However, the actual cost may surprise you.
The general rule of thumb when purchasing life insurance is to multiply your annual salary by 15 to 20 and purchase that much coverage. For instance, if your salary is $50,000, you’d purchase $750,000 to $1 million in life insurance. That sounds like a lot, and it sounds expensive! But believe it or not, it’s not that expensive – and it’s an important safety net to have in place.
For someone in their early 30s, in good health, buying 20 or 30-year term life insurance, the cost is around $400 to $1,000 per year. Term insurance means there’s no buildup of any cash – it’s just pure cost insurance. You pay the premium and, if you should pass away, the death benefit is paid to your beneficiaries.
According to the article, about 1 in 3 millennials said they’re looking at purchasing life insurance. So if you’re in that group and you’re underinsured, go out and get a quote. You can even do it online if you don’t want to talk with an agent.
Find a policy that fits your circumstances and know that your family’s money situation is taken care of, should something happen to you. It could make a huge difference. Until next time, enjoy.