We wanted to take a moment and remind everyone that September is Life Insurance Awareness Month. Do you have life insurance coverage? If you don’t, and believe that you don’t need it, please watch this video, and consider changing your mind:
If you’re shopping for life insurance, it’s important to know how much life insurance to buy. Some people say you should merely multiply your salary by a factor of eight, but this week’s video offers a much more accurate method of determining how much coverage you should consider.
Many people think life insurance is a luxury they can’t afford, or is something that isn’t really necessary. While it’s true that some people live perfectly happy lives without life insurance, the reality is that these policies are meant to help the folks you leave behind.
Why consider a permanent life insurance policy? Here are five reasons:
- Money for Final Expenses: Burials are expensive, and if you’re 60 and live to be 90, that twenty-year term life insurance policy you bought from television isn’t going to be there when your loved ones have to pay for your funeral.
- To pay off your mortgage: If you’re the sole provider for your family, your death could leave them with a mortgage and no way to pay it, especially if you bought your home at a later age than most, or refinanced it to pay for college tuition or another large expense. Permanent life insurance will ensure that there is money to pay off the home, even if your term policy hasn’t come due yet.
- To cover estate taxes: If you’re fortunate enough to have a large estate, your family will be responsible for paying estate taxes after your death. If you purchase life insurance and put it in an ILIT (Irrevocable Life Insurance Trust), you can not only avoid leaving your heirs with a large tax bill, but also give them liquid assets with which to pay any taxes that cannot be avoided.
- To get the most out of your pension: When you retire, you might choose to take the highest possible payout option on your pension, but still leave income for your surviving spouse after your death. Permanent life insurance offers financial protection.
- To care for special needs children: If you have special needs children who are likely to outlive you, you’ll want to leave life insurance in place for after you’re gone. If you’re married, there’s an option called Survivorship Life Insurance which will provide for your spouse as well.
A.M. Best Co. has released results of a recent study which shows that last year, the face amount of life insurance issues declined 3.1% from the previous year, to a total of $2.87 trillion. On a business-issued basis, term life insurance saw a greater decline, decreasing 11.7% to $1.13 trillion, while group life business also dropped to $1.13 trillion, though in that case it only declined by 1.5%. The report, a compilation of five Statistical Studies featured in BestWeek looked at how much credit life, group life, ordinary life, term life and total life insurance was issued.
According to Andrew Edelsberg, a vice president in the life and health division of A.M. Best Co., the reason for lower term life insurance sales last year was a combination the sluggish economy and higher rates. He explained, “Term pricing generally increased as carriers were, in many cases, forced to self-fund Regulation XXX reserves as alternative solutions became relatively expensive.” Edelsberg added, “We saw an increase in whole life and universal life sales due to consumer’s demand for cash value policies, as well as universal life with no-lapse guarantees.”
Many people have said that it’s never too early to buy life insurance, but does age really affect the cost? This video from YouTube and eHow answers that question.