Life insurance should provide its policyholders with the peace of mind that comes from knowing loved ones will be financial secure after their death. However, according to the Life Insurance and Market Research Association, just 44% of U.S. households have individual life insurance plans, and of those, 40% think they are underinsured. Nationwide Financial found that while the average consumer will earn around $1.5 million before they retire, the average life insurance policy benefit is just $300,000. There are several risks to being underinsured:
- Not being able to afford a mortgage after the loss of a primary breadwinner could result in the loss of your home or significant downsizing.
- Tapping retirement (such as IRAs) and savings to make up for the loss in income can negatively impact your future financial health.