Life Insurance Awareness Month

By Aaron Forbes

September 19, 2017

 

September is Life Insurance Awareness Month: Are You Protected?

September is Life Insurance Awareness Month, which makes it an excellent opportunity to consider financial planning to assess your family's financial wellness and determine whether your loved ones have the protection they need. Most Americans see the value in paying for car insurance and home insurance, but many fail to recognize how crucial life insurance can be to family members who are left behind.

Life insurance coverage is designed to replace your wages and help your family pay off debt if you die. A small monthly premium can ensure that your family isn't left to struggle with high funeral expenses, a mortgage, bills, and daily expenses. In honor of Life Insurance Awareness Month, here are important facts you should understand about life insurance.

The Benefits Are Tax-Free

According to a recent report analyzing consumer understanding of life assurance, 69% of consumers do not know that the benefits are tax-free. This means your beneficiaries will not need to pay taxes on the death benefit they receive. If your policy has a death benefit of $150,000 that is exactly how much will be paid to your loved ones. You can also set up how you wish your beneficiaries to receive the money, whether it's a lump sum or an annuity.

46% of Americans Die with Less Than $10,000 in Assets

Americans are saving less than ever, and this can be detrimental to family members who are left behind after a loved one dies. According to a study by the National Bureau of Economic Research, almost half of Americans die with $10,000 or less in financial assets or no assets at all. This isn't even enough to cover a typical funeral, let alone the bills you may leave behind.

Most Americans Live Paycheck to Paycheck

A recent report by CareerBuilder found that 78% of people working full-time live paycheck to paycheck with no savings. Almost three-quarters of workers in the U.S. are in debt with more than half reporting their debt is unmanageable. If something happened to you today, would your family have enough in savings to cover basic expenses and debt?

There Are Many Types of Coverage

Life insurance isn't a one-size-fits-all product. There are two main types of policies and several ways to customize a policy to fit your needs and the needs of your family.

 

The most common and affordable type of insurance is a term policy. Term life insurance will only remain in effect for a specific term, such as 10, 20, or 30 years. If you die during the term, the policy pays a death benefit. Otherwise, the policy will expire unless you renew it. Term insurance has low-cost premiums with high levels of coverage, but it does not accumulate a cash value that you can borrow against.

 

Whole insurance is different because the policy remains in effect as long as you pay premiums. Whole insurance does build a cash value that you can borrow against or it will be added to your death benefit. This is because a portion of your premiums go toward a savings component.

 

There are a few types of whole insurance and they vary in how the cash value is invested and managed. While whole life policies have cash accumulation and guarantees, they tend to be the more expensive plan because of the additional benefits.  

 Payouts Can Be Used for Anything

Your beneficiaries have the freedom to use the benefits they receive however they like. The most common use for death benefits is replacing lost income. The money can also be used to pay off a mortgage, pay off debt, put children through college, and cover final expenses.

 Coverage Isn't As Expensive As You Think

86% of Americans report they have not purchased a life coverage policy because it's too expensive, yet consumers overestimate the real cost of coverage by two times. A healthy 30-year-old man can buy a $250,000, 20-year term life insurance policy for about $13 per month.

 

If you're concerned about how your family would get by financially without you, it's time to take financial planning seriously. Contact The Buren Insurance Group today for help assessing your family's insurance needs.

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