Death happens every day. Although death often comes as a huge shock, John Perry, an assistant professor of economics at Centre College in Danville, Kentucky, said life insurance can help lessen the blow of the loss of a loved one by providing support for grieving families.
Perry said on Kentucky.com that each person needs to find the life insurance plan that fits for them, as no two people are the same. He writes that people should buy life insurance rather than whole life or any of its relatives. He likens this to "gimmick" insurance, such as return-of-premium policies.
Plans should be worth roughly eight to 12 times one's yearly income, Perry writes. He said a good rule of thumb is to buy half the amount a spouse buys. Insurance should cover at least the period of time that dependents will be counting on the policyholder's income.
"No one wants to use life insurance — or any type of insurance, for that matter," Perry said. "But bad things happen, even to good people. And I think we each have an obligation to make sure we are as prepared as we can be for any bad things (and good things) that life may bring."
The Insurance Information Institute said one third of Americans are covered by individual life insurance, which is the lowest it has been in 50 years. The website said insured individuals owned an average of $154,000 in life insurance in 2010, compared to the average amount of $102,300 for people in group policies.