Do I Need Life Insurance? - You Probably Already Know the Answer to That

Colin Grubb
May 3, 2016

Is It Time For Me to Buy Life Insurance?

The answer to that question is another question. Do you have people depending on you financially? A spouse? Children? Relatives? If the answer is yes then life insurance is a really good idea.  You need to be able to assure that your family is at least able to carry on as they are currently in the event of your unplanned absence.

Grief is difficult enough. Grief compounded by the inability to cover debts, funeral expenses, mortgages, or the daily cost of living can turn a bad situation into a family disaster. Money will never take your place. But money can ensure your loved ones won’t have to struggle unduly.

So why do so many Americans not have life insurance?

One, they think they can’t afford it. Two, they think they can’t afford it.

Jennifer Fitzgerald, Co-founder and CEO of online insurance broker PolicyGenius puts it like this. "Life insurance tends to be at the bottom of the financial priorities list, particularly if you're struggling to make ends meet."

The plain truth is times are tough. The average American is laboring under significant revolving debt (credit card) while income growth has not kept up with the cost of living. In fact, when the Federal Reserve Board recently asked if they’d be able to come up with $400 for an emergency, nearly half of Americans admitted they couldn’t.

With so many of us barely covering our monthly expenses as it is, it is easy to understand why we’d balk at the prospect of throwing yet another payment into the mix.  But the truth is life insurance, particularly term life, can be significantly less expensive than most people think. And considering the nightmare its purchase may help avoid for your family, it’s definitely worth at least taking a look at the options to see if you can squeeze it in.

"For a plain vanilla term life policy, you can get coverage in place for surprisingly little money," Fitzgerald continues. "What scares people off is they don't know how much it costs. In fact, surveys show people overestimate the cost of life insurance by 3 or 4 times."

From rock solid, stalwart American icons like State Farm and New York Life, to relatively new Internet-based comparison services like PolicyGenius and SelectQuote Life, there are more options than ever for buying life insurance policies. Here at Consumers Advocate, we've reviewed all of them and consolidated the results into our traditional top ten list to give you the tools to make the right decision for you and your family. 

The Elephant in the Room

Aside from the financial aspect, another factor that keeps us procrastinating buying life insurance is that the very act of doing so brings us face to face with our own mortality. Most of us don’t like to think about dying.  And we certainly don’t want to spend any time than we have to contemplating the likelihood of an untimely death.

When we’re young and healthy, life insurance plans will be the most affordable. But this is precisely the time of life when we are least likely to think of such things. When we’re just getting started, the thought of already talking about the finish line can be unfathomable.  But life happens, spouses happen, children happen, and any one of a million different curveballs can come our way that could cause us to ponder what things would be like if we were gone. While it might be initially unpleasant, the payback you’ll get in peace of mind will pay dividends in the here and now.

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There are basically two kinds of life insurance, term life and whole life (also called permanent life insurance). In our experience most people would be served well by term life insurance, the cheaper option. However there are cases where you will need a payout regardless of when you die. Having a special needs child or dependent would be one such case. There are many permutations of term and whole insurance and this is just a simplified description. For more details see here.

Whether it's term of whole life, if you have not accumulated enough savings to cover funeral expenses and replace your portion of the family's income until you would have reached 65 (when social security, investments and pensions would kick in and children would be, ideally, on their own)  then you need life insurance.


I Do Need Life Insurance. What Do I Do Next?

The process of buying life insurance can be intimidating and complicated. Fitzgerald says this mainly due to the traditional structure of the business sector as a whole.

"The industry for so long has been organized around agents and doesn't know how to engage today's modern financial consumer. For those agents to make money they have to go upmarket and try to sell higher value whole life or universal life policies. PolicyGenius offers a no-commitment, anonymous way to get accurate quotes, just so you can see how much it costs. We don't even ask for your email."

At Consumers Advocate we’ve reviewed traditional and newer life insurance providers alike by five factors. They are 1) the options offered for coverage and premiums, 2) a given institutions financial reputation as assessed by trusted outside sources, 3) policy features offered, 4) types of plans offered and 5) plan rider options.

Have a look at our top ten. You have more options than you realize, even if you are feeling the financial pinch.


If you'd like to get some quick and anonymous quotes from different life insurance providers, head on over to our partner and industry leader PolicyGenius. (Full disclosure if you choose to give PolicyGenius your business we receive a small commission.)