By George Leamon, CLTC, Lutgert Insurance –
According to research conducted by Limra, a research organization that’s been conducting insurance industry related surveys since 1960, almost one third of American households don’t have life insurance coverage. This was the highest uninsured percentage in over four decades of Limra research, and it showed about 9 million more uninsured households than the 2004 Limra study.
The above data is a direct sign of the monetary pressures and struggles that low to middle-income American fanli1ies have faced in the current economy. Many have modified their life insurance coverage due to decreased or lack of income, employers cutting back on benefit packages, or loss of employer-provided coverage. Other households are failing to meet or maintain their life insurance needs because of unsettling news about the recession, job loss, and future economic outlook.
However, the above economic woes make it even more crucial for families to protect financial stability with life insurance. Saving or paying off existing debt might sound like a prudent financial decision, but if it means sacrificing life insurance needs, then these normally wise money choices may be putting a family in danger. Here are a few things to consider about cutting back or delaying the purchase of life insurance:
Delaying the Purchase of Life Insurance
Life insurance shouldn’t be viewed as a luxury purchase. Most people view having insurance on a car or home as a necessity, not a luxury. If some unexpected event was to happen that damaged the car or home, then the owner would need some safety net to pay for the resulting damage. Life insurance provides an even more important safety net that will pay for the financial damages and repercussions of an unexpected death. This crucial protection should not be delayed, as none of us know when a tragic accident or disease might strike an unprotected family.
Cutting Back on Life Insurance
Half of the participants in the latest Limra study said that they needed more life insurance coverage. These participants cited other financial priorities, such as paying off debt, as the reason they didn’t purchase the life insurance that they knew they needed. Whether a person is considering cutting back on life insurance to help make ends meet or payoff debt, the result is the same – the person is taking an unnecessary risk with the financial security and well being of their family. It’s also important to note that canceling life insurance benefits today can also make it harder to secure affordable life insurance in the future when new health conditions, age, and new lifestyle factors might be a cost and qualifying issue.
Not Protecting What’s Most Important
Lack of coverage, whether it be an insufficient amount or none at all, leave the most important people unprotected. As mentioned above, no one knows when an unexpected event or illness can leave remaining family members without the monetary resources that the breadwinner normally provided. How would the family pay for cost of living expenses, send children to college, maintain a mortgage and auto loan, and so forth? Insurance benefits provide a means to continue paying existing bills and plan for payment of future expenses. If the current economy has proven anything to Americans, it’s that the future is uncertain. Protect what’s important!
Those that aren’t covered with a life insurance policy can seek the guidance of an insurance professional to determine options and specific coverage need. Those that are already life insurance policy holders might want to contact their life insurance provider or agent to review their policy and make sure it provides sufficient coverage. There may even be certain factors that would qualify a person for lower premiums. For example, those that have stopped smoking, corrected obesity, quit a “risky” job or hazardous hobby, or made other improvements to overall health might be eligible for a different rate class.
George T. Leamon, CLTC