If there is one thing the recession (and all the subsequent economic twists and turns that followed) has taught us, it’s the value of being proactive when it comes to our futures. While you may not be able to control what’s happening in Washington, D.C. and on Wall Street, you can take charge of your personal finances, making choices that will go a long way to protecting your future and that of your loved ones.
The old saying “Ignorance is bliss” has been replaced with “Knowledge is power,” as Americans everywhere recalculate households budgets, examine mortgage rates and credit card fees and look for ways to save at the gas pump and grocery store. And during September, which is Life Insurance Awareness Month, you have one more way to make the most of your money and protect your future: by evaluating your life insurance coverage.
But, to use another aphorism, “You can lead a horse to water, you can’t make him drink.” While LIFE or your insurance agent can educate you about the importance of life insurance, only you can buy it. Unfortunately, the reasons for not buying a policy, or for not increasing current coverage to meet future needs, often are based on fallacies or misinformation.
How much do you know about life insurance? Read through the following statements to check your insurance IQ. Consider this Life Insurance 101:
I’m single so I don’t need life insurance. Even single people may leave behind others who depend on them: children, aging parents, or even a relative or close friend who depends on them for financial support. Having a policy in place that will take care of those people once you’re gone is the final act of love you can give.
I have coverage through work. That should be enough. Maybe. Or maybe not. The only way you’ll know if the coverage is adequate is by using tools such as LIFE’s Life Insurance Needs Calculator. But keep in mind that, depending on how it’s written, the policy may end if your employment ends. Carrying an individual policy gives you additional coverage and control, no matter what happens with your job situation.
I’m too young to worry about life insurance. Actually, there are several reasons why you should buy a policy when you are young. For one thing, purchasing life insurance coverage while you are young and healthy means your premiums will be comparatively low. Also, while the young like to think they are immune to health issues and adverse life events, accidents and illnesses can occur at any age. Having a policy in place guarantees your insurability.
Life insurance is too expensive. How much do you think it costs? Chances are, whatever you think is probably considerably more than the reality. According to LIMRA and LIFE’s 2012 Insurance Barometer Study 80% of consumers were unable to correctly estimate the actual cost of life insurance. Most greatly overestimated its price—believing, for example, that the best available yearly rate of a 20-year, $250,000, level-term life policy for a healthy 30-year-old would have a median cost of $400. (Correct answer? $150!) Before you decide you “can’t afford insurance,” be sure you know what the actual cost is — and what the cost of not being insured could be for you and your family!
“Term.” “Perm.” “Riders or options.” It’s too complicated to understand. Anyone who has tried to wade through pages of legal documentation or contracts can be forgiven for thinking that it’s all designed to make you feel uninformed, uneducated and overwhelmed.
Fortunately, you don’t need to let a lack of knowledge stand in your way of making an intelligent decision. Start by visiting online resources such as LIFE website, where you’ll find easy-to-understand information and tools. Then schedule a sit-down with your insurance professional or financial advisor, or if you don’t have one, you can find one here. Pull together a list of questions and possible scenarios. For example, what if you:
- leave your employment and start your own company
- have another child
- take responsibility for an aging parent
- find you have a terminal illness?
Sharing your concerns and plans with your advisor is an important part of the evaluation process. This enables him or her to give you the best recommendations for the type and amount of coverage that will meet current needs and future decisions.
Use Life Insurance Awareness Month to increase your understanding of what life insurance can mean for you and your family. And then get to it!