Awareness and preparation can bring peace of mind.
The need for life insurance may not be a pleasant topic to think about, but life insurance can provide peace of mind for anyone who has it—and for their family members. About 50% percent of American adults have some form of life insurance, according to the 2022 Insurance Barometer Study, and 31% of American adults say the COVID-19 pandemic increased the likelihood they will buy life insurance in the next year.
Uncertainties sparked by pandemics and other unforeseen events are why National Life Insurance Awareness Month is important. Few households are financially prepared for the death of a primary wage earner. The 2022 study revealed that two out of five parents reported that they are barely—or not at all—financially secure, and 44% of respondents said their family would be suffering financially in less than six months if a wage earner died.
Nearly 25% said they would be struggling financially within a month. The history behind National Life Insurance Awareness Month The nonprofit Life Happens established September as Life Insurance Awareness Month in 2004 to help educate consumers about the importance of getting adequate life insurance coverage.
Life Happens partners with the nonprofit trade association LIMRA (initially known as the Life Insurance Marketing and Research Association) to conduct the annual Insurance Barometer Study to track Americans’ financial concerns and what role life insurance may play in their financial plans. The annual studies tend to reveal that many Americans don’t know or understand all of the potential benefits life insurance offers—which is why raising awareness is so important.
The 2021 study revealed that the top reasons consumers buy life insurance are:
To cover burial and final expenses
To help replace lost income/wages of a wage earner
To transfer wealth or leave an inheritance
Improving knowledge—and disproving misconceptions—could raise ownership rates. Anyone who is new to all the life insurance options available may feel a little overwhelmed the choices. The common types of life insurance include term, whole, universal, variable, indexed universal, simplified issue, guaranteed issue, and group life. Understanding the different risks, benefits, and variables of any insurance you’re considering is why doing your research is so important.
According to LIMRA, the most common misconceptions about life insurance are: It’s too expensive. The 2021 Insurance Barometer Study revealed that more than half of Americans overestimate the cost of life insurance. For example, a healthy 30-year-old’s term life insurance is about $160 a year, but 44% of Millennials estimated it to cost $1,000 a year. I’m young and healthy—so I don’t need it.
Unfortunately, accidents happen—and so do pandemics. If you have loved ones who rely on you, help insure their futures. Plus, you can get life insurance now at a lower rate than if you wait. LIMRA’s 2021 study revealed that nearly 40% of those with life insurance regret not buying their policies sooner. My workplace life insurance is all I need. Double-check to be sure that’s true—and con- sider that your insurance coverage may disappear if you leave or lose your job. Because of the COVID-19 pandemic, 27% of adults lost their life insurance coverage in 2020 due to an unplanned loss of employment, according to LIMRA. LIMRA also reports that by buying your own insurance, you may be able to get better coverage for less than what you’re paying for your work life insurance plan. It’s too complicated. A lot of Americans have reported they are intimidated by the process and the options. Many insurers offer free quotes online, which makes them easier to compare. An independent insurance agent who works with several companies can also help you find the best coverage at the best price. We should never let misconceptions interfere with our decisions. The more we know about life insurance options and potential benefits, the more likely we are to make the best choice for our situation.
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Longleaf Wealth Management Group, LLC and LPL Financial are separate entities.