Times are tough, jobs are scarce, and families nationwide struggle financially. Recent trends show consumers focus on saving more, spending less, and paying down their debts. In such a tumultuous economy, you would assume people would start cutting out the “unnecessary” expenses like life insurance. However, that’s absolutely not the case.
Americans are beefing up life insurance.
Americans recognize that life insurance is more important than ever in these difficult times. As a matter of fact, 56 percent of Americans say the economic downturn has made life insurance more critical, according to a 2009 survey released by the nonprofit LIFE Foundation.
Based on the survey, a mere 9 percent believe life insurance needs have diminished. Recent trends support these survey results: more people have added to their life insurance coverage over the past year rather than cutting back or dropping it.
The LIFE survey also found that 71 percent of Americans with life insurance made no changes to their coverage over the last year. Of those who did make changes, 39 percent increased their coverage. Another 28 percent bought life insurance for the first time in the past year.
So, why did these people decide to purchase life insurance or give their coverage a boost? Two of the reasons survey participants gave were a need to keep up with their growing family’s needs and a desire for extra protection because they feel more financially vulnerable.
A historical trend
This nationwide boost of life insurance is certainly not a modern phenomenon. Historically, the U.S. life insurance industry has seen a hike in sales during economic downturns. Why? Many experts believe that consumers already feel defenseless in tough economic times, and they want to protect their family’s financial well-being better.
“The American people are smart and understand the importance of protecting their loved ones with life insurance, especially in these uncertain financial times,” said Marvin H. Feldman, president and CEO of LIFE, in a press release. “Americans realize that life insurance can be the safety net that catches their family when tragedy strikes, and we’re pleased to see that so many appear to be holding onto their coverage, even as they’re scaling back other parts of the family budget to make ends meet.”
Is life insurance essential?
Any capable financial expert will tell you that life insurance is absolutely necessary-especially if you have loved ones who depend on your income. If you were to die today, what would happen to your family? Would they have enough money to pay the bills and maintain their current standard of living? Would your spouse need to search for work in this dried-up job market? Would there be enough money left to send your child to college?
An effective life insurance plan will cover all your family’s financial needs, from the monthly mortgage and utility bills to your child’s college education. In these economically uncertain times, this is more important than ever.
Let’s say your children are grown and out of the house. Certainly, you can cancel that life insurance policy now. Not so fast. Life insurance coverage can be used for much more than supporting your surviving children.
For example, the payout from your life insurance policy could cover your final expenses, including medical bills, estate taxes, and funeral expenses. Without life insurance coverage, your family will be expected to foot these bills. Considering the average funeral costs $10,000 or more, do you want to leave this heavy financial burden on your loved ones? Do they have that much cash on hand in these difficult times? Probably not.
You can also use your life insurance policy to leave a legacy. For example, the payout from your policy could fund your grandchild’s college education or go to your favorite charitable organization.
Make room in your budget.
If you don’t think you can afford to pay for life insurance right now, remember that some life insurance coverage is better than none. Many affordable term life insurance options are available for families with tight budgets. For example, a healthy 35-year-old could purchase a 10-year $250,000 term policy for around $180 a year. That breaks down to less than 50 cents a day.
Talk to an expert if you struggle to make room for life insurance in your budget. Brian Gruss can help you determine how much and what kind of life insurance you need and what you can realistically afford.