September is Life Insurance Awareness Month: Are you sufficiently covered?

It's Life Insurance Awareness Month, a time to recognize the important role life insurance plays in guaranteeing a families' financial security. See if you're sufficiently covered and find out how to buy life insurance in this guide. (iStock)

When is the last time you checked your life insurance coverage? If you can't remember, now is a good time to review your policy. 

September is Life Insurance Awareness Month, a campaign sponsored by industry leaders to educate consumers on the importance of life insurance as a part of financial planning. Life insurance is a relatively small monthly cost that provides financial security for those who rely on your income, such as your spouse or children. 

Take a moment this month to analyze your current life insurance coverage or shop around for a new policy. You can learn all about life insurance and find the policy that's right for you on Credible.

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3 questions to ask about your current life insurance policy

If you think your life insurance policy may not be sufficient, you may be right. More than 100 million Americans have a gap in life insurance coverage, according to estimates from the nonprofit trade organization LIMRA. Here are a few questions to ask yourself to see if your life insurance plan is a good fit:

  1. Has my situation changed since I took out the policy? For example, if you've had children or your health care situation has changed, let your insurer know. This ensures your beneficiaries won't run into any issues in accessing the death benefit.
  2. How much is my death benefit? The life insurance payout will essentially need to replace your income so that your loved ones will be financially secure in the event of your untimely death. Some financial experts recommend taking out a policy that's worth 10 to 15 times your annual income to ensure there's no life insurance coverage gap.
  3. How much does my policy cost? Life insurance premiums depend several factors, including the size and length of the policy. Compare your premium to the average cost of life insurance to make sure you're not overpaying.

If you're not happy with your life insurance policy, you're not stuck with it forever. You can shop around for a new policy if you want a higher death benefit or a lower premium, for example. Browse life insurance plans across multiple insurers in one place using Credible's online marketplace. 

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How to buy life insurance

Over a third (36%) of Americans plan to purchase life insurance this year, including nearly half (48%) of millennials, recent LIMRA research shows. But while many people plan on getting life insurance, some may not know how to begin the process. Here's how to get started:

You can kickstart the process by visiting Credible to get free life insurance quotes in just minutes.

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Determine how much coverage you need

Your life insurance payout, or death benefit, should be large enough to replace your income while your dependents deal with the aftermath of your passing. Ideally, the death benefit will help pay for your funeral expenses and outstanding debts, as well as cover living expenses for a set period of time.

The amount of coverage you need depends on how much money you make, how much debt you owe (such as a mortgage or student loans), how many dependents you support, and any other financial obligations you may have. Typically, your life insurance payout will need to be 10 to 15 times your annual income.

WHOLE VS. TERM LIFE INSURANCE: HOW TO DECIDE WHAT'S RIGHT FOR YOU

Choose between term and whole life insurance

There are two basic types of life insurance, term and whole. Term life insurance is the traditional type of insurance in which you pay a monthly premium for a set period of time, typically 10-30 years. If you die before the term expires, your beneficiaries receive a payout. The average term life insurance premium for a healthy, young policyholder is about $25 to $35 per month, according to Policygenius data.

Whole life insurance, on the other hand, doesn't have a set expiration date. It lasts the entire duration of a policyholder's life and has a guaranteed cash value, making it a more expensive insurance option. Whole life insurance premiums can cost anywhere from $300 to $3,000 or more per month, depending on the policy size and age of the policyholder.

You can compare quotes for whole and term life insurance on Credible, so you can see which option is best for your needs.

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Shop around with multiple insurance companies

Life insurance companies have criteria when determining who is eligible for a policy and how much that policy costs. Because premiums can vary from company to company, it's important to compare plans across multiple life insurers. 

Fortunately, you don't have to call up each company individually to see which one is right for you. Visit Credible to get free life insurance quotes through multiple insurers, so you know you're getting a good rate.

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