September is Life Insurance Awareness Month

For the past 15 years, September has been designated as Life Insurance Awareness Month (LIAM). LIAM was created in 2004 to help educate Americans on the importance of protecting their loved ones and providing for them financially in the event of an untimely death. This year, we are proud to have well-known actress, model, and mom Brooke Shields as the spokesperson for this campaign.

The question that often gets asked regarding Life Insurance Awareness Month is, “why do you need to set aside 1/12 of the year to focus on life insurance?” The reason is very simple; because there are a lot of misconceptions about this insurance product, and because of this, a large percentage of the American public is missing out on the opportunity to affordably protect those closest to them.

Our new spokesperson Shields says it best, “Protecting my family financially means everything to me. That’s why I have life insurance, and you should, too.”

Common Misconceptions about Life Insurance

It is estimated that one out of every three families in the United States would be unable to meet their day to day expenses within just one month of the primary breadwinner’s death. For the other two thirds, the vast majority would not last more than three to six months. 

Despite this reality, more than 40% of Americans have no life insurance at all. And of those that do have it, a large number of them are either underinsured or have only a group plan through their employer that would vanish instantly if they lost their job.

Why do so many Americans fail to obtain life insurance? One of the major reasons is people do not like to think about their own mortality, and another is that it is not a mandatory insurance product. But these are not the only of reasons people avoid life insurance. Many do so because of various misconceptions in the marketplace.

Here are some of the most common myths about life insurance:

It is Too Expensive

Many people do not believe they can fit life insurance into their budget. But in many cases, the exact opposite is true. Life expectancies are increasing with each passing year, which drives down the cost of a life policy. These days, a fairly healthy person in their 20s, 30s, or even 40s can usually get six figures worth of coverage through a term life policy for around $1 a day. If you are a little older and have some health concerns, you can usually still get coverage for about $2 or $3 a day.

It is Too Confusing

There are a lot of life insurance products on the market today, and it can be difficult to understand the difference between terms such as a whole life, universal life, variable life, and other types of permanent life policies. However, if you focus strictly on term life insurance, it is fairly simple to understand. With a term life policy, you receive a certain level of coverage over a specified period of time, and the coverage remains in effect as long as you pay your premiums. There are some other wrinkles, but this is essentially all you need to know to understand term insurance.

It is Not Necessary if you are Young and Healthy

This is not necessarily true. Life is fragile, and we never know when our time on this earth will be up. If you are young and healthy, you may not think much about your own mortality, but that will not make it go away. Young and healthy people need life insurance just as much as those who are older, maybe more so. For example, if you are married, have a couple of young kids, and you are the primary breadwinner in the household, you should be protecting your family in the event of a worst-case scenario. The good news is that life insurance is much cheaper at your age, and you can get a lot more protection for a lot less money if you take out a policy early on.

You Cannot Obtain Life Insurance if You are Too Old

Again, this is not necessarily true. You can usually still buy life insurance when you are older, unless you have a terminal illness. It will cost you more because of your age and any health concerns you may have, but your goals will also be different than when you were younger. For example, if your kids are through college and your home mortgage is paid off, you can probably get by with a much smaller amount of coverage, enough to cover funeral and burial costs and maybe leave something for your loved ones.

The Insurance you Have through your Employer is Sufficient

Many employees can obtain a certain amount of life insurance through their workplace.  This is normally group coverage that is fairly cheap and does not require a medical exam. While coverage through your employer is much better than no coverage at all, it is not a good idea to put all your eggs in this basket. These days, people tend to change jobs every few years or so, and when this happens, you will not be able to take your life insurance with you. Buy life insurance through your employer if it is offered, but only use it as a supplement. You should also have your own policy that stays with you no matter where you go.

How to Shop for Life Insurance

As mentioned earlier, there are numerous life insurance products on the market. You can spend all day filling out forms at various websites and waiting around for different companies to call you back with a quote. But a better way to shop for life insurance is to just speak with an independent insurance broker.

Independent agents work with several of the top insurance carriers in your state, and because they are not captive to any one particular insurer, they can consult with you without any inherent biases, and they can shop freely for you to help you find the right insurance coverage to fit your needs and budget.