When most people think about the purpose of life insurance, they think about covering their funeral expenses and their debt (typically their mortgage in particular).
And as a minimum or a starting point, maybe that’s okay. It’s certainly better than nothing.
But it’s also far from ideal. Because the biggest financial hole you would leave behind is all the income you would’ve earned.
That’s what you should be using insurance for—to replace your lost income.
Almost everyone is underinsured because their mind immediately goes to funeral expenses and paying off the mortgage, not to replacing their lost income.
There are all kinds of reasons why thinking about this and taking action is hard. No one wants to think or talk about death. No one likes to even imagine the possibility of it. Not now. Not ever. Certainly not too soon.
And that’s why so few are ever properly prepared. Why it’s so easy to leave your loved ones in a tough financial spot. Not because you don’t love or care about them. Not because you don’t want the best for them.
But simply because you lost track of what you were trying to achieve with life insurance in the first place. You want your family to be able to maintain their current lifestyle no matter what happens. They can’t do that without your income.