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How Can I Be Sure That I Have Enough Life Insurance?

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Life Insurance by Reata Insurance Group

In 2019 alone, the life insurance claims and benefits payouts in the state of Texas amounted to $34 billion. While there is a clear need for life insurance coverage in Texas, half of the 59% insured Americans don’t have enough life insurance coverage, according to the Life Insurance Marketing and Research Association (LIMRA). Even worse, some of the underinsured ones are not aware of their insurance status.

Read on to learn how you can make sure that you have enough life insurance in Texas.

If Your Term Life Insurance Policy Is About to Expire

The basic purpose of life insurance is to cover funeral expenses, cater to the financial needs of your dependents, and repay your debts when you die. Since the term life insurance only covers you for a specific period, you will not receive a payout if you outlive it, and this also means you will become uninsured. If your policy is about to expire, you should reassess your financial situation and determine if you still need life insurance coverage. For instance, you may consider renewing your policy or purchasing a new one if, by the end of your term life insurance:

  • You are still alive
  • You still have dependents
  • You have a large outstanding debt that may harm your family if you die
  • Your family won’t be able to afford your funeral expenses

Depending on your financial needs, you can either convert your term life insurance to whole life coverage or increase your policy’s size.

If You Only Have a Group Life Insurance Policy

According to the Texas Department of Insurance (TDI), employer-sponsored group life insurance plans are some of the most affordable plans in the market. However, compared to individual plans, employer-sponsored plans generally provide a lower level of coverage and do not allow the addition of riders. This means that if you only have your employer-sponsored group life insurance plan, you’re likely underinsured.

To increase your life insurance coverage, ensure that you purchase an individual life insurance policy that will complement your group life insurance, especially if you will have a large financial need in the future. Apart from providing bigger coverage, individual life insurance is also more flexible in terms of adding riders and changing employers.

If You Have Permanent Life Insurance That is Building Guaranteed and Tax-Free Retirement Benefits

Permanent life insurance is the best savings plan to choose if you find it difficult to exercise the discipline of saving and investing. Additionally, it can come with benefits such as building cash value and generating tax-free benefits for your dependents. This means that you can maximize the life insurance payout if you minimize taxes or have a tax-free retirement benefit. In case you withdraw your cash value during your lifetime, ensure you repay the insurance company before you die, or else they will deduct the amount from your death benefits. You can also save for retirement through the following strategies:

  • After-tax strategy – Allows payment of taxes on your earnings if you deposit a lump sum into your account for a certain period.
  • Tax-deferred strategy – Allows your earnings to grow tax-deferred.
  • Pre-tax strategy – Allows taxation on retirement income benefits.
  • Tax-free strategy – Allows your earnings to grow tax-deferred and generate tax-free benefits.

If you fall in any of the categories discussed in this article, you probably don’t have enough life insurance coverage and might need to purchase additional coverage. Finding affordable life insurance that protects your estate doesn’t have to be difficult. Contact the team at Reata Insurance Group. We can help you secure reliable life coverage in Texas that suits your needs and budget.

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