Life (or the end of a life) is unpredictable, but you can be prepared for it. Life insurance is an important part of any personal financial plan. According to the Life Insurance and Market Research Association (LIMRA)’s most recent “Facts About Life 2016” study, the number of U.S. households with life insurance has increased by more than five million over the last six years. However, this means that 30% of American households (or 37.5 million homes) still do not have any sort of life insurance coverage. One and five households with minors, or children under age 18, were reported as being uninsured in 2016. To support these findings, the non-profit Life Happens’ “Insure your Love Study 2017” found that only 55% of Americans have life insurance.
Life insurance is increasingly important to protect the financial security of dependents, yet there are so many who do not have any kind of coverage or too little coverage. Why? LIMRA’s study reports that eight out of ten U.S. households believe that they need more insurance coverage but do not pursue it because of the cost and/or other financial priorities. However, prior research has shown that on average people overestimate the cost of life insurance by up to three times the actual cost. Life insurance options vary in cost, making them more affordable than most people would expect.
It was also reported by LIMRA that six out of ten households cited not knowing what to buy or how to purchase policies as their reason for not having insurance. There are numerous questions surrounding coverage that many avoid having to think about answering. How much coverage should you get? Who should you use as your beneficiary? What kind of policy is right for you? All of these questions and the dozens of others surround one, challenging concept- your death. No matter the euphemism used, this can be a terrifying idea- as can preparing for your departure. However, you are hardly ever the only one impacted by your own passing. Your death is also frightening to those who depend on you and your household contributions to keep their daily lives intact both emotionally and financially.
Life Insurance is not about protecting your life or well-being as most, if not all, other types of insurances are. It is a form of coverage protecting those closest to you from facing insurmountable debt caused by your final expenses or other financial hardships without your income. Therefore, the questions around selecting the best type of insurance, the right amount, etc. are all the more important.
Over the next few weeks, we will be asking and discussing the answers to several questions intended to help you navigate your search for the best life insurance coverage for you and your loved ones. Here are a few of the upcoming topics:
- What about them?
- Who should receive the benefit?
- How much are you worth?
- What kind of policy do you need?
- Where can you find Life Insurance coverage?
Check back to the New York State Bar Association Insurance Focus blog next week for part two of our blog series on life insurance!