Voluntary Benefits
Published by Trustmark Voluntary Benefits on September 14th, 2021
If you’re reading this, perhaps you’ve either:
A) Made the decision purchase a life insurance policy
B) Become curious enough about life insurance to do some research
Whichever the case may be, you’re in the right place. Purchasing a life insurance policy is an important step in securing your financial future and protecting your loved ones. That’s why we’ve put together a short list of things to consider and ask questions about before or during open enrollment.
1. How much life insurance do I need?
When it comes to choosing a dollar amount for your life insurance policy, financial experts recommend having seven to ten times your annual salary.1 While your employer may already offer life insurance, they typically only pay one to two times your annual salary…so it probably isn’t enough!2 Consider your family and current financial situation. For example, if you were to pass away, do you have young children who would need financial support for years to come or debts your family would be responsible for paying off? If the answer to these scenarios is “yes”, then you may need more life insurance.
2. How much life insurance can I afford?
As with any purchase, you want to make sure you can afford what you’re signing up for. Consumers, especially younger generations, tend to over-estimate the cost of life insurance. Millennials, in particular, estimate the cost of life insurance to be over 5X the actual amount.3 To figure out how much life insurance you can afford, do some research and see how much it would cost you each month. Then, take a look at your budget and see where life insurance might fit in. If you’re having a hard time, consider where else your money is going…is there something you can eliminate or reduce the amount you’re spending to afford a life insurance policy?
3. What type of policy makes sense for me?
Depending on where you are in your research, you may or may not know that there are many different types of life insurance, but generally, you’ll be weighing a decision between permanent or term life insurance. If you’re unfamiliar, permanent life insurance is a policy you own for the duration of your life, even if you change jobs, as long as the premium is being paid. Term life insurance is more like renting a policy for a certain period of time and is typically a more affordable option. If you have the option to choose your type of policy, consider each in terms of affordability and how long you may need to support your beneficiaries.
4. Are there additional benefit options available to me?
Some life insurance policies include additional benefits that you can use while you’re still living – also known as “living benefits” or “long-term care”. These benefits usually pertain to home care, adult day care, assisted living and nursing homes. Life insurance policies that offer long-term care benefits help pay for extra expenses associated with these services that health insurance or Medicaid doesn’t cover. Be sure to check if these benefit options are available to you.
5. Who else can I cover?
Depending on your policy, you may be able to purchase life insurance directly for your spouse, children or your grandchildren. Doing this helps provide more complete coverage in the case of a loved one passing and sets your family up for a more stable financial future.
Whether you’re ready to buy a life insurance policy now or you’re still doing your research, use this list as a starting point to ask questions at this year’s open enrollment. Taking the time to understand all your options will help you make the most informed decisions about the life insurance policy that will protect your family’s financial future for years to come.
1CNN Money. Ultimate Guide to Retirement. How big should my life insurance policy be?
2Understanding your employee benefits." Miriam Caldwell. The Balance Careers. Jan 2017
3LIMRA's Life Insurance Barometer Study, 2018
A) Made the decision purchase a life insurance policy
B) Become curious enough about life insurance to do some research
Whichever the case may be, you’re in the right place. Purchasing a life insurance policy is an important step in securing your financial future and protecting your loved ones. That’s why we’ve put together a short list of things to consider and ask questions about before or during open enrollment.
1. How much life insurance do I need?
When it comes to choosing a dollar amount for your life insurance policy, financial experts recommend having seven to ten times your annual salary.1 While your employer may already offer life insurance, they typically only pay one to two times your annual salary…so it probably isn’t enough!2 Consider your family and current financial situation. For example, if you were to pass away, do you have young children who would need financial support for years to come or debts your family would be responsible for paying off? If the answer to these scenarios is “yes”, then you may need more life insurance.
2. How much life insurance can I afford?
As with any purchase, you want to make sure you can afford what you’re signing up for. Consumers, especially younger generations, tend to over-estimate the cost of life insurance. Millennials, in particular, estimate the cost of life insurance to be over 5X the actual amount.3 To figure out how much life insurance you can afford, do some research and see how much it would cost you each month. Then, take a look at your budget and see where life insurance might fit in. If you’re having a hard time, consider where else your money is going…is there something you can eliminate or reduce the amount you’re spending to afford a life insurance policy?
3. What type of policy makes sense for me?
Depending on where you are in your research, you may or may not know that there are many different types of life insurance, but generally, you’ll be weighing a decision between permanent or term life insurance. If you’re unfamiliar, permanent life insurance is a policy you own for the duration of your life, even if you change jobs, as long as the premium is being paid. Term life insurance is more like renting a policy for a certain period of time and is typically a more affordable option. If you have the option to choose your type of policy, consider each in terms of affordability and how long you may need to support your beneficiaries.
4. Are there additional benefit options available to me?
Some life insurance policies include additional benefits that you can use while you’re still living – also known as “living benefits” or “long-term care”. These benefits usually pertain to home care, adult day care, assisted living and nursing homes. Life insurance policies that offer long-term care benefits help pay for extra expenses associated with these services that health insurance or Medicaid doesn’t cover. Be sure to check if these benefit options are available to you.
5. Who else can I cover?
Depending on your policy, you may be able to purchase life insurance directly for your spouse, children or your grandchildren. Doing this helps provide more complete coverage in the case of a loved one passing and sets your family up for a more stable financial future.
Whether you’re ready to buy a life insurance policy now or you’re still doing your research, use this list as a starting point to ask questions at this year’s open enrollment. Taking the time to understand all your options will help you make the most informed decisions about the life insurance policy that will protect your family’s financial future for years to come.
1CNN Money. Ultimate Guide to Retirement. How big should my life insurance policy be?
2Understanding your employee benefits." Miriam Caldwell. The Balance Careers. Jan 2017
3LIMRA's Life Insurance Barometer Study, 2018
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Written by Trustmark Voluntary Benefits
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