It’s not that you don’t realize the importance of life insurance. You most likely do. Although, you may be among the majority of people who believe they require additional coverage but refuse to get it.
As per the 2019 Insurance Barometer Study, which was performed jointly by Life Happens, a non-profit educational organization, and LIMRA, a non-profit research trade group, life insurance ownership fell from 63% in 2011 to 57% in 2019. James Scanlon, the Lead Research Director of LIMRA Market Research said: “Two-thirds of Americans realize the importance of life insurance, although many do not have enough coverage to safeguard their families”.
In addition, research suggests that inadequate life insurance has serious implications for several American families, with four out of ten homes without life insurance having immediate difficulty paying living expenses if their major wage earner died.
The major issue is that: most people believe that thinking about buying life insurance, talking about getting life insurance, and understanding the reasons for obtaining life insurance are all important financial planning aspects. However, none of these measures can be taken without first discussing two dreadful things that most of us find extremely uncomfortable: death and our mortality.
Several people express anxiety at the idea of beginning the life insurance purchasing process. This is one of the key reasons why millions of Americans postpone purchases of coverage they realize they need to help make sure that their loved ones be able to fulfill future financial responsibilities after they pass away.
- GETTING CONFUSED IN THE BUYING PROCEDURE:
If you’re unclear about which sort of coverage is best for you or how much insurance to get, join the club. Just a few people know about life insurance actually: why we need it, how much we should get, what sort of coverage is best, when wages/benefits are paid, how wages/benefits may be taxed, and so on.
That’s fine. It is not your responsibility to handle the complicated world of life insurance. That is the responsibility of an insurance expert working in collaboration with your consultants. The correct expert team can help you navigate the process of selecting the insurance that is most suited to your needs, budget, and financial goals.
- INSUFFICIENT KNOWLEDGE ABOUT COVERAGE
According to the survey, knowledge regarding life insurance and related products is vital to assisting people in getting coverage. “They won’t be driven to get the coverage if they don’t understand what it is and, more significantly, why they—personally—need it,” says Faisa Stafford, CFO and president of Life Happens.
This common lack of knowledge frequently leads to poor coverage. For example, when asked how much a $250,000 twenty-year standard term life insurance policy for a healthy 30-year-old would cost, the media estimated $500 per year, more than three times the real cost. Given that the most common reason for not getting life insurance is that it is too costly, many people may be discouraged from buying it if the actual cost of coverage is overestimated.
- ADDITIONAL FINANCIAL OBJECTIVES
It’s not that many underinsured people don’t need the life insurance they require. With all of the other financial requirements on their finances, it may be tough to find the extra funds to pay the premiums. Alternatively, like in the above situation, they have no idea what coverage costs or whether they can afford even basic life insurance coverage.
The truth is that purchasing life insurance that you cannot afford serves no one. If it causes trouble for your family or forces you to make decisions that appear contradictory, you will eventually quit the policy. Eventually, you lose, and your family suffers as a result.
That is why it is essential to use the skills of insurance and financial specialists to assist you to choose the coverage that satisfies your strategic planning requirements while remaining within your expense.
- NAVIGATING THE RIDDLES OF CHOICES
There are numerous types of life insurance plans on the market. Term life insurance policies and other forms of permanent (cash value) life insurance policies are examples of this.
Term policies offer life insurance coverage for a fixed period. Your beneficiary will get the death benefit from the insurance if you die during the coverage period. Unless the policy automatically renews for another period, if you live to the end of the term, the insurance simply terminates.
Permanent insurance policies give coverage for the rest of your life, despite future health behaviors, as long as you pay the payment to maintain the policy in service. A percentage of each premium payment goes toward developing the policy’s cash value, which can be accessed through loans or withdrawals. (Take into account, however, that the value of money and the death benefit from loans and withdrawals is reduced and the policy may lapse, which might lead to tax liabilities if the policy ends on the insured’s death). So long as the policy is in effect, the cash value grows-tax-delayed.
■ Variable life insurance
■ Whole life insurance
■ Variable universal life insurance
■ Indexed Universal Life Insurance
It’s clear why individuals defer buying the life insurance they know they require. For all the justifications you can think of avoiding purchasing life insurance, here are five compelling reasons why you should:
■ To give your family members a steady source of income
■ To clear debts
■ To cover last expenses and taxes
■ To leave a legacy for your loved ones
■ To provide charitable donations