Do I Have Enough Life Insurance? 5 Risks of Being Underinsured

Life insurance is a significant part of preparing for your family’s financial future. Having a life insurance policy helps secure the future of your loved ones if you pass away suddenly. But according to a 2025 study, 49% of American adults have no form of life insurance. That’s almost half! 

And of the 51% who are, plenty are underinsured: 100 million adults believe they need more life insurance. 47% say they would have trouble paying life expenses within six months of their primary wage earner’s death, and 40% of adults say their loved ones would be barely or not at all financially secure if their primary wage earner died unexpectedly. 

While there are different kinds of policies, whole life insurance and term life insurance, there are different ways that you can use them. But the most important thing is that you purchase life insurance, especially if there are people who depend on your wages. Here are five risks you take if you don’t have enough life insurance. And remember, you can learn more about life insurance anytime by reaching out to a Farm Bureau agent.

Risk #1: Your Funeral Costs Are Hard to Cover

The national median cost of an American burial funeral in 2023 was $8,300, while the median cost of a cremation funeral was $6,280. If you aren’t adequately insured, the money used for burial cuts into the money your family needs for living expenses and other financial goals. The last thing a grieving family needs is the stress of being in a financial bind due to your funeral. Life insurance can help pay for these costs and relieve that burden.

Risk #2: Your Family Doesn’t Have Enough Income

Many household bills don’t change (or change very little) when someone passes away. Your family will still have to pay mortgage or rent, utilities, insurance, food, school fees and so on. Without a proper plan in place, those day-to-day expenses can become burdensome and put your family in a tenuous financial position. Adequate life insurance secures their future and helps them maintain a standard of living at a time of great stress.

Risk #3: You Burden Loved Ones with Your Debt

Credit cards, mortgages, loans — debt doesn’t go away after death. Collectors can quickly suck your estate dry, and some can then pursue payment from co-signers. For example, if you and your spouse purchased a car jointly, your spouse will still be responsible for paying that debt, even if your life insurance proceeds aren’t enough to cover it. So, talk to your agent and ensure that your policy will cover your debts, should you pass away.

Risk #4: Your Financial Goals Won’t Be Met

Do you want to send your kids to college? Do you hope your spouse can retire someday? Want to provide for grandchildren? If you are underinsured, the long-term financial goals you worked toward your whole life won’t be met. Having a large enough policy will help your family meet those goals even after you’re gone.

Risk #5: You Can’t Tap into Your Policy in Life

Some policies have a cash value or include riders that allow you to withdraw money if you have a terminal or chronic illness. Some people use this for experimental treatments or the opportunity to make memories with their families during the time they have left. While this cuts into the death benefit, it provides a way to access money when you need it. Consider adding a rider to give you and your family peace of mind.

Do You Have Enough Life Insurance?

So, how much life insurance do you need? There isn’t a one-size-fits-all answer. It depends on your debt, family situation, long-term financial goals and other factors. A rough idea is typically 6 to 10 times your annual income. This simple life insurance calculator may help you to determine how much coverage you need.

Prepare for Your Future

Ready to make a decision? For a personalized recommendation or to talk about increasing your coverage, reach out to Farm Bureau to discuss your best options.