Consider Life Insurance to Protect Your Loved Ones

Chances are, while you’ve meticulously purchased health insurance, dis­ability protection, and other benefits over the years, you might have neglected life insurance.

According to the Life Insurance and Market Research Association, 30 percent of U.S. households have no life insurance at all; only 44 percent have individual life insurance (as opposed to group insurance through, say, an employer).

Beyond that, while 50 percent of U.S. households acknowledge that they need more life insurance, 86 percent of those haven’t bought it yet because they assume it’s too expensive, LIMRA statistics reveal. In fact, the average amount of coverage is down substantially since 2004.

About two-thirds of consumers choose “money for a comfortable retirement” as their top financial priority, but fewer than 40 percent of these consider the concerns that life insurance coverage traditionally addresses—such as premature death, funeral expenses, and leaving an inheritance—in the same category.

That is the case, even though many Americans, again according to LIMRA, say they could not last a month without the (major) breadwinner’s salary.

Aside from the assumption that life insurance would be too expensive for them, “people are often uncomfortable talking about it or even thinking about it—the association is just too unpleasant,” said Diana Caine-Helwig, a self-employed State Farm Insurance agent with an office on East Chocolate Avenue in Hershey.

Nonetheless, life insurance is something you should seriously consider. September is an especially appropriate time, since it has been designated Life Insurance Awareness Month by LIMRA to raise awareness among consumers and producers about the need for life insurance.

“Life insurance can help provide for the people who depend on you financially, if you can’t be there for them”

“Life insurance can help provide for the people who depend on you financially, if you can’t be there for them,” said Caine-Helwig.

The benefits from a policy can be used for final expenses, including a funeral; to help replace lost income or employer benefits; to cover credit card and other debts; to pay off a mortgage or car loan; to finance a child’s education; to settle estate taxes; to support a charity; to create an inheritance; to care for a special-needs child; to provide money for a comfortable retirement; and more.

If both husband and wife work, and both salaries were taken into account to qualify for a mortgage, you have to ask yourself: How will the surviving person be able to pay off the mortgage and remain in the house with only one salary? Life insurance is a possible answer.

Life insurance isn’t just for the “traditional family” of a married couple with children. It can also benefit unmarried individuals with a significant other, stay-at-home spouses, single parents, singles, retirees, empty nesters, and business owners.

People often shop for life insurance in response to life events, such as marriage, children, buying a house, etc.

“Some people think employers cover them, but they might not have as much insurance as they need,” said Caine-Helwig. “Also, people change jobs more frequently than they used to, and in this still-struggling economy, many have less discretionary income.”

While four in 10 households with children under 18 now include a mother who is either the sole or primarily earner of her family, among women who have life insurance, the coverage they have is only 69 percent of the average coverage on men, she said.

Even if you’ve taken time off from work to care for children, life insurance is still advisable.

“Moms need life insurance,” advised Caine-Helwig. “They are often financially undervalued. I recall the case of a man whose wife passed away. He had two children and had to hire a nanny at $36,000 a year to make up for the loss and not be forced to give up his career as a pilot.”

In fact, because women generally live longer than men, they pay less for life insurance. In general, the younger you are when you buy a policy, the less expensive it is. Nonsmokers also pay less than smokers.

There are two basic types of life insurance. Term is pure protection. People can sign up for 10, 20, or 30 years. You pay a premium for coverage and age. Permanent (or whole life) also includes tax-deferred cash value and continues throughout your lifetime. Cash value gives you a guaranteed amount of insurance.
Some permanent plans offer dividends and interest; you can build up money for later in life and for retirement. Some plans have a rider for long-term care expenses or for disability (in which case the premium is waived).

The pro of a term policy is that it’s less expensive. The con is that the person can outlive it and never get paid benefits.

“It’s like renting vs. buying a property,” explained Caine-Helwig.

“Life insurance is about loving someone and wanting to leave something behind to provide for that person after you are gone,” said Caine-Helwig. BW