Social media has enabled millions of Americans to learn more about their friends and relatives, bringing them closer together despite physical distance. But there’s something else that social media has helped more people “connect” with: life insurance.
“Most millennials use social media to learn more about life insurance.”
Many people recognize that life insurance is an important type of coverage to own, but they’re not exactly sure why this is or how much is enough. Outlets like Facebook and Twitter have served as a means to provide context, with more than one-third of Americans in a recent LIMRA poll saying they’ve used social media to find out more information about life insurance. Millennials are particularly partial to its usage, as over 50 percent of 18- to 35-year-olds get recommendations from insurance agents via social networking service providers.
With social media being fairly intuitive, this may explain why Americans have utilized it as much as they have, as life insurance can seem like a complex topic. In reality, however, it’s fairly straightforward when you strip away the jargon and get to the guts of it. Here’s a brief rundown of how life insurance works and why it’s important:
What is life insurance?
At its essence, life insurance is all about providing financial stability and security for your family. There aren’t many guarantees in life, but life insurance serves as a noteworthy exception. With a policy in place, loved ones can rest assured they’ll be protected financially should they experience a loss, such as if the home’s primary income earner becomes seriously ill or passes away. This is an important consideration, when polls show nearly 80 percent of workers currently live paycheck to paycheck, according to a recent survey from CareerBuilder. By policyholders paying their premiums, insurers provide family members of the deceased compensation up to the limits of the policy, the details of which are found in the terms of agreement.
What does life insurance pay for?
The proceeds from a life insurance policy pay for a variety of cost considerations that result upon a person’s passing. These include the expenses related to funeral and burial, ongoing living expenses the family may encounter (e.g. mortgage payment), college education for soon-to-be high school graduates and retirement funding for the wife or husband of the deceased. According to funeral arrangement firm Parting, the average funeral in America costs between $7,000 and $10,000. Life insurance can defray some or all of these expenses.
How much is enough?
One of the most common questions life insurance buyers use social media to find answers for is determining the proper amount of coverage. LIMRA indicates the best way to know is through a basic formula:
Present-day and future financial considerations minus current value of capital (e.g. annual salary, investments,etc.) = Life insurance $ amount.
Take a look at this downloadable brochure for examples of immediate, ongoing and future expenses that are easy to miss.
It’s easy to get stuck in the life coverage weeds, but these basic life insurance considerations should help you keep things clear. Funding your life insurance policy is simple as well. Let us at Global Financial Distributors show you just how easy it can be with Leveraged Planning®.