The topic of life insurance doesn’t have much going for it. First, it’s about insurance, which many find boring and complicated. Second, it can involve paying money for something you may or may not use depending on whether its Term insurance or Whole/Universal life.
And, it’s about death.
Those are difficult hurdles and probably among reasons why many surveys show many of us are vastly underinsured when it comes to life insurance, which might better be called “income insurance” because its primary purpose is to replace income from the family breadwinner.
“Selling life insurance is an uphill battle,” said Byron Udell, CEO of online life insurance broker AccuQuote.com. “It’s not a product that’s fun to buy.”
But life insurance should be a fundamental part of financial planning for those who have others relying on their income like children and a spouse.
Yet 2013 statistics show ownership of individual life insurance policies is at the lowest level in 50 years, with only 44 percent of households owning them, according to the insurance industry group LIMRA. And 86 percent of people say they haven’t bought life insurance because it’s too expensive, yet they overestimate its cost by more than two times, the group found.
A national survey commissioned by New York Life Insurance Co. recently found that Americans’ gap in protection worsened considerably since the Great Recession. Americans say they want enough life insurance, on average, to cover expenses for at least 14 years after the loss of a breadwinner. But they have only three years of protection in place.
“It’s no surprise that Americans are underinsured. What did surprise us was the magnitude of the gap and the fact that it has grown so dramatically since 2008,” Chris Blunt, co-president of the Insurance and Agency Group of New York Life, said in releasing the results.
Also concerning is what the survey found about Americans’ perception of what life insurance is for. A majority said the top reason for buying it was to cover funeral expenses, but paycheck replacement is far more important.
The good news for consumers is, the basics of life insurance continue to apply. “The beauty of life insurance is that it’s not a fast-moving industry,” said Amy Danise, editorial director for Insure.com. “Unlike health insurance, where what you know one month is wrong the next month, life insurance advice is consistent.”
Contact your PRCUA insurance agent to first find out how much you need then you can work your way into a solution that will help address this need. PRCUA has a variety of plans to help you achieve your goal.