Can you have too much life insurance?  “Overprotection" is a tricky topic. Let’s be honest—no family is going to complain about receiving too much money from an insurance company if their loved one dies. (When do people ever complain about getting too much money?) All things being equal, the lower the financial burden your family faces after you die, the better.

More protection = higher premiums

However, all things aren’t equal when it comes to life insurance. Insurance is a business, after all. If you want a bigger payout when you die, then you’ll have to pay higher premiums while you’re alive. And if you live past your retirement age, overprotecting will significantly affect the lifestyle your family can afford.

One thing we’ve noticed while building our life insurance recommendation engine is that lots of people are being told they should have more life insurance than they truly need. Why? Because life insurance is typically sold by asking leading questions, such as “Do you want to be able to pay for your children’s education if you die?" or “Do you want to make sure you have enough money to donate to charity if you die?" When most people get asked these questions, they think, “Of course, it would be great if my children’s education is taken care of."

If you plan to pay this cost with your savings or future income (and can afford it), great! Life insurance will ensure it’s paid for if you die. But if you can’t afford the education costs in the first place, it doesn’t make sense to protect it with insurance coverage. Doing so would make you overprotected. It’ll create a financial windfall if you die young but add financial burden if you live to retirement. Why? Because if you live to cut the cake at your retirement party, you’ll end up paying high premiums along the way to cover expenses you may not have paid for anyway.

How much coverage should you get?

Before buying insurance, you should think long and hard about the expenses you’d be able to afford if you were still alive. Consider how your family depends on you financially and how they would adjust if you died. We know these aren’t the types of thoughts that give you the warm fuzzies. But they’re important to think about if you want to protect your family efficiently and effectively.

We protect you against buying too much life insurance

As a new company focused on giving customers quality, transparent, and customized life insurance advice, we help you understand your insurance needs and help you to avoid buying too much life insurance. Our proprietary algorithm projects your income and lifestyle expenses to identify when you’re at risk of buying too much life insurance and to recommend coverage only for needs you’d be able to afford if you live into retirement.

Laura McKay

COO & Co-Founder

Laura brings 7 years of experience working in insurance & strategic operations as a management consultant at Oliver Wyman, after experiences at Manulife and Munich Re. In 2017, she launched a successful initiative for the World Economic Forum focused on innovation in insurance, working closely with insurers, tech pioneers, and policy-makers.

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