Life Insurance Awareness Month works to bring light to the importance of life insurance – a topic that many people may not have enough information on to take action or simply overlook its significance. As part of our commitment to providing client-centric insurance solutions, we wanted to provide this short consumer overview about life insurance.
According to a study conducted by Life Happens, 9 in 10 Americans agree that most people need life insurance, but only about 60% of people are actually covered.
Did you know…3
- Approximately 20 percent of individuals who do not own life insurance don’t know how much coverage they should have.
- Among individuals with life insurance, about 1 in 5 say that they do not have enough life insurance.
- Close to 40% of people are unaware of the type of life insurance they need and how much coverage they need. Among millennials, 6 in 10 feel this way.
- Three in 5 adults own some kind of life insurance.
What is life insurance?
Life insurance provides your family members or other chosen beneficiaries with a sum of money—usually tax-free—in the event of your passing.1 Essentially, a life insurance policy is a contract with an insurance company that provides a death benefit to beneficiaries upon the insured’s death in exchange for premium payments.2 It’s protection that can give you and your family peace of mind, knowing that they will be taken care of when you aren’t around. And it can be an essential part of the tax-advantaged estate planning process.
Who needs it & what does it cover?
According to a study from LIMRA, more than one-third of all households would feel a negative financial impact within just one month if their primary wage earner passed away.3 If anyone relies on you financially, you may need life insurance.4 If you are steadily retired or financially independent and no one would suffer financially if you were to die tomorrow, then you may not need life insurance.
Aside from monetarily helping dependent family members, life insurance helps to compensate for the inevitable costs associated with death such as: outstanding debts and mortgages, funeral costs, continuing a family business, future financial needs such as children’s education, helping protect a spouse’s retirement plans, and helping to meet ongoing living expenses.5
Life insurance can help relieve financial stress, allowing family members to better cope with a loved one’s death.
What are the types of life insurance?
There are various types of life insurance policies available, which is why it is crucial to speak with a professional to discover what type of insurance and coverage might be suitable for you, your family, and your unique situation. Three of the most common types of life insurance that you should be aware of are term life insurance, universal life insurance, and whole life insurance.
Term life insurance is generally less expensive than permanent life insurance and provides financial protection for a specific period of time, such as 10 to 20 years. With this type of insurance, the premium payment amount remains the same throughout the coverage period you select.
Universal life insurance is a permanent insurance with a cash value component that is designed to give you coverage throughout your lifetime. Although this type of life insurance may have higher premiums, the policies can be flexible and usually allow you to increase or decrease your coverage amount or premium payment at some point during your lifetime.
Whole life insurance is another type of permanent insurance that provides lifetime coverage with a cash value component. Similar to universal life, whole life insurance also usually has higher premiums than term life due to its lifetime coverage period. The main difference between it and universal life is that whole life insurance policy premium payments and coverage amounts are typically fixed.
When should you get life insurance?
The age at which you might purchase life insurance is not one-size-fits-all. With that being said, if you have people who are dependent upon your income, chances are you probably need life insurance. As an example, if you’re 25 with kids, or 35 with a stay-at-home wife and newborn baby – life insurance is a good idea.7 If you’re 50 years old, single, and have no children, no outstanding debts or people relying on your income – you may not need life insurance, although you may want to investigate it as a tax strategy. Even baby boomers 55+ are finding new life insurance policies designed to help meet their needs in retirement, be it for tax-advantaged wealth transfer, spousal protection or the potential need for long-term care.
For more information on life insurance, contact Quantum at 800.440.1088.
Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions such as surrender periods.
These materials are for informational and educational purposes and are not designed, nor intended, to be applicable to any person’s individual circumstances. It should not be considered as investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. The Quantum Group, and its affiliates, have a financial interest in the sale of their products.
Zoe is dedicated to producing exceptional content for both Quantum and our financial advisors. She has contributed to multiple publications and has experience in public relations, digital marketing and video production for a major television sports network.