What is your most valuable asset? Many people will quickly answer this question by referring to their home, or perhaps some other item of value. But what most of us don’t consider is the fact that our income is actually the most valuable asset in our lives. It sustains us from year to year, allows us to prepare for retirement, and provides for our loved ones.
But, for some reason, an astonishing number of Americans have not adequately protected their most valuable asset. The average person’s life insurance policy will only replace about 16 percent of the income they will earn, in the event that something happens to them.
What does this income mean to your family? It keeps a roof over their heads, pays for their medical needs, helps them prepare for educational expenses, and more. Loss of your income represents a major loss to your loved ones.
So, why don’t most of us fully protect our incomes? It probably comes down to misconceptions about life insurance. Yet, we don’t hesitate to insure our homes or cars.
The following figures might surprise you, and illuminate the truth of the situation:
- To insure the average home value of $272,900, insurance costs… an average of 73 dollars per month
- To insure the average car, worth $30,000, insurance costs… an average of 65 dollars per month
- To insure the average lifetime income of an individual, insurance costs… 62 dollars per month for a man, and 58 dollars per month for a woman
In other words, it probably costs less to insure your income, than it does to insure your home or your car!
Of course, these figures are just nationwide averages, and exact costs can value depending upon a number of factors. The point is that we all accept the need for auto and homeowners insurance, but we tend to vastly underestimate the value of our own earning power.
Since security and peace of mind are the most important legacies you could leave, let’s talk about whether your life insurance policy really offers enough protection for your loved ones. At the same time, we can evaluate how your life insurance policy fits into your financial plan overall, and discuss ways that it can add even more value to your portfolio.