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The life checklist item No. 2: As you prepare for the end, do you need life insurance?

It can be a confusing and not-so-fun topic, but we have to talk about life insurance.

DALLAS — We are now getting to the second item on our ‘death checklist’, which we re-named the more appealing ‘life checklist’. This special series is meant to make sure we are all financially ready for the end of life.

This time we are talking about life insurance. The latest numbers show that about 52% of Americans have life insurance coverage, but that percentage is at a decade low.

How do you know if you even need coverage?

There are different opinions about who should have life insurance coverage. It has been recommended for parents or grandparents with dependents, stay-at-home parents or spouses, breadwinners, small-business owners, and for anyone who worries about leaving debt or funeral expenses to their heirs.

When we consider all those broad groups and we consider that 52% of Americans have coverage, it seems like we might have a lot of people who aren’t insured, who perhaps should be.

Life insurance amounts

If you do take out a life insurance policy, you will have to consider how much coverage to get. Using the most recent stats, the average policy taken out is $178,150. Is that enough? For some people, it may be more than enough. For many, though, it probably isn’t sufficient. Guidance says you may need up to 10 times your annual salary--or even more if you have young children.

But as with everything, cost is a huge consideration. The premiums vary widely, depending on if you are male or female, a smoker or a non-smoker, younger or older, healthy or not so healthy. It also depends on the type of life insurance. Is it a less expensive term policy, where you usually pay the same monthly premium and have coverage for a set time like 10, 20 or 30 years and then it expires with no benefit if you are still living?

Is it universal life, where you can build cash value, but premiums can go up significantly with your age? Or is it whole life insurance that covers you for your whole life and has cash value you can dip into…but is usually the most expensive? Read more about term life insurance coverage, universal life coverage, and whole life coverage.

Here’s a link to a life insurance cost calculator. It can’t factor all the variables, but it might give you a rough idea.

If you have coverage, make it known!

Whatever coverage you choose, make sure you include it in a will, tell your family about it or at least inform your chosen beneficiaries, so they know it exists. Sometimes insurers and policyholders lose track of each other over the years, or the insurer doesn’t know the policyholder has died, or they can’t reach the beneficiaries and the beneficiaries don’t even know they are beneficiaries.

The State of Texas put out an article about this. Several years ago, they estimated $178 million was due to Texans. They’ve gotten some of that money to the people it belongs to, but you can also search here. Also, here are some resources for you to search nationally to see if a lost loved one has a lost life insurance policy you didn’t know existed.

Before You Leave, Check This Out