According to research conducted by Limra, a research organization conducting insurance industry-related surveys since 1960, almost one-third of American households don’t have life insurance coverage. This was the highest uninsured percentage in over four decades of Limra research, showing about 9 million more uninsured households than in the 2004 Limra study.
The above data directly signifies the monetary pressures and struggles that low to middle-income American families have faced in the current economy. Many have modified their life insurance coverage due to decreased income, employers cutting back on benefits packages, or losing employer-provided coverage. Other households fail to meet or maintain their life insurance needs because of unsettling news about the recession, job loss, and future economic outlook.
However, the above economic woes make it even more crucial for families to protect financial stability with life insurance. Saving or paying off existing debt might sound like a prudent financial decision. Still, if it means sacrificing life insurance needs, these wise money choices may put a family in danger. Here are a few things to consider about cutting back or delaying the purchase of life insurance:
Delaying the Purchase of Life Insurance
Life insurance shouldn’t be viewed as a luxury purchase. Most people view having insurance on a car or home as a necessity, not a luxury. If some unexpected event was to happen that damaged the car or home, then the owner would need some safety net to pay for the resulting damage. Life insurance provides an even more important safety net that will pay for the financial damages and repercussions of an unexpected death. This crucial protection should not be delayed, as none of us know when a tragic accident or disease might strike an unprotected family.
Cutting Back on Life Insurance
Half of the latest Limra study participants said they needed more life insurance coverage. These participants cited other financial priorities, such as paying off debt, as they didn’t purchase the life insurance they knew they needed. Whether a person is considering cutting back on life insurance to help make ends meet or pay off debt, the result is the same – the person is taking an unnecessary risk with their family’s financial security and well-being. It’s also important to note that canceling life insurance benefits today can also make it harder to secure affordable life insurance in the future when new health conditions, age, and new lifestyle factors might be a cost and qualifying issue.
Not Protecting What’s Most Important
Lack of coverage, whether it be an insufficient amount or none at all, leaves the most important people unprotected. As mentioned above, no one knows when an unexpected event or illness can leave remaining family members without the monetary resources the breadwinner typically provides. How would the family pay for living expenses, send children to college, maintain a mortgage and auto loan, and so forth? Insurance benefits provide a means to continue paying existing bills and plan for payment of future expenses. The future is uncertain if the current economy has proven anything to Americans. Protect what’s important!
Those who aren’t covered by a life insurance policy can seek the guidance of an insurance professional to determine options and specific coverage needs. Those already life insurance policy holders might want to contact their life insurance provider or agent to review their policy and ensure it provides sufficient coverage. There may even be certain factors that would qualify a person for lower premiums. For example, those who have stopped smoking, corrected obesity, quit a “risky” job or hazardous hobby, or improved overall health might be eligible for a different rate class.