Life Insurance Protection Declines to All-Time Low; Why Americans Need Coverage Sooner Rather Than Later
March 19, 2012
(San Diego, CA) Even people with no life insurance at all recognize that coverage is the cornerstone of a family’s financial planning. Surveys have repeatedly shown that Americans “know they need” more life insurance, but most procrastinate–confused about the many insurance options available, reluctant to add another expense to an already strained budget, or unaware of affordable life insurance plans.
LIMRA’s life insurance consumer studies for 2011 reveal that the proportion of U.S. adults with life insurance protection has declined to an all-time low as 41 percent (95 million) of U.S. adults have no life insurance at all.
Both men and women are less likely to own life insurance today than they were in 2004—only 61 percent of men and 57 percent of women have some sort of life insurance coverage.
Only 1 in 10 insured adults own both permanent and term life insurance —half as many in 2004.
The likelihood of being without life insurance has dramatically increased for every age group since 2004.
Many people are familiar with the standard “whole life” insurance option. These plans build cash value, and offer an investment component as well as a death benefit. The premiums are expensive, and administrative fees are high, especially in the first year. However, term life insurance policies–which are issued for a fixed term of years–have affordable premiums that are a fraction of the price of whole life policies.
Most term life policies have conversion and renewability options. If you later decide you want a whole life policy, you can convert your term policy by paying the premium difference. You can also renew the policy at the end of the term. Both these options do not require evidence of insurability, which may be an important factor if your health has declined throughout the term of your policy.
What if you become disabled during the term of your policy? Many term life policies have disability provisions that will pay your term life premiums if you become permanently and totally disabled.
The same economic challenges that make it difficult to budget for insurance premiums will make it critical for a family facing life without a breadwinner–especially if that family has been depending on two incomes to stay afloat. It’s always easier to budget for a current expense than a future plan. Besides the usual “demands” on your income, there are daily choices that impact available funds.
There are insurers who aggressively advertise “guaranteed acceptance” term life policies. As a general rule, these policies pay low benefits, with premiums significantly higher than a standard term life policy. You’re better off qualifying for a standard term policy while you’re young and healthy enough to do so.
Some insurers offer several different levels of coverage, based on health and other insurability factors. These factors include family medical history, blood pressure, cholesterol, your health history, your driving record, tobacco use, alcohol use, and whether you have “dangerous” employment or hobbies. Some insurers may also consider your credit rating. For most people, health declines with age, and a diagnosis of a common condition such as diabetes can make you “uninsurable”.
The price of term life insurance is calculated as of the age you acquire the policy, and usually increases for every five year period. Therefore, the younger you are when you buy your policy, the cheaper the premium will be.
Once you have purchased your term life policy, the premium remains the same. By taking advantage of your youth and good health, you can lock in coverage and protect your family no matter what challenges the future may hold.
EQUOTE® Universal, no medical exam, and term life insurance quote provider helped contribute to this article. EQUOTE® has expanded its call center to help answer questions in regards to policy choices, premiums and carriers. For more information please visit http://www.equote.com
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