Interesting Life Insurance Facts

(based on consumer surveys)

LIFE INSURANCE MAY BE ONE OF THE MOST IMPORTANT PURCHASES THAT YOU WILL EVER MAKE, YET:

Approximately half of U.S. households are un or underinsured. The average coverage gap is roughly $200,000.00.

Roughly one-third of people say they do not have a life insurance policy. Interestingly, approximately 25% of these people have a life insurance policy and are unaware of it.

(some through work or as an add-on with a checking account)

86% say they have not bought life insurance because it is too expensive. Most of these overestimated the cost of life insurance by double or more.

70% of all households said they would have trouble covering everyday living expenses after a few months if the primary wage earner died.

Even though 84% of American households surveyed agree that they need life insurance, less than 60% have it, and 40% wish they had more coverage.

You don’t have to die to use life insurance. Some policies can be accessed during a critical, chronic, or terminal illness. It is important to realize that not all policies have this option.

Policies with this option have what is referred to as “Living Benefits.”

Life Insurance is Divided into Two Broad Categories, which will be covered below.

  1. TERM LIFE INSURANCE
  2. PERMANENT LIFE INSURANCE

Term Life

Q: Why term life?

A: The most common reason people choose term life is because it can be less expensive, especially when younger and in good health.

  1. Term life traditionally offers a lower initial cost, with premiums increasing in later years.
  2. It is useful when the need for life insurance is not permanent. Term life is also called “Time Insurance” because it provides specific coverage, usually for short-term needs.
  3. In some cases, it can be helpful because some policies allow you to convert to permanent life insurance coverage without showing evidence of good health.

Q: Why permanent life?

A: Predetermined monthly cost or level premiums. With many permanent life policies, the premium payments can remain the same. In most cases, they will be lower than term insurance premiums in later years.

Additional potential benefits include:

  1. They can provide an accessible source of tax-advantaged funds. They accumulate cash that can be used for retirement, college education, or emergency expenses.
  2. They can provide tax advantages. They can provide a tax-advantaged income stream and help accumulate tax-deferred wealth when properly funded and structured.

Q: Is there more than one kind of permanent life insurance policy?

A: Yes, there are two types of permanent life insurance. They are Universal Life and Whole Life.

  1. Universal Life has flexible coverage and premiums; these increase or decrease the amount of coverage.
  2. Whole Life provides guaranteed coverage for the insured’s entire lifetime. Additionally, they can accumulate cash tax-differed and carry a guaranteed death benefit.