Understanding The Importance of Life Insurance

Life insurance is the process of getting financial protection in lieu of specified premium. The basic purpose of this kind of insurance is to guarantee the continued financial support to the family of insured in the event of the insured person’s death. While the process always has a stigma surrounding it and sounds really unpleasant and demotivating-specially with the facts like “Japanese life insurance will pay, even if you commit suicide. Therefore motivating people to kill themselves, so their family can live in comfort. One of many reasons for the high suicide rate in Japan”- The importance of life insurance for people over 70 is significant. Nothing can justify it better than statistics because, numbers never lie!

In 2016, 66% of American recommended life insurance to their friends and family. Why? One must ask. These people answer this question themselves by agreeing that life insurance is more important than retirement funds and health insurance. LIMRA statistics tell that according to 49% insured persons, the reason for owning life insurance is to cover burial and other financial expenses. 41% see life insurance as mean of replacing lost income and 30% believe that life insurance will cover their mortgage costs. From the reasons stated earlier, it seems that people are getting aware of the benefits associated with life insurance and making educated choices.

Still, stats show that 30% of Americans do not own a life insurance policy in any amount. That’s shockingly high number. Interestingly, most of the insurance holders are of 45 years or older. This depicts that most of American take half of their life to make basic decisions. The reason behind it maybe the lack of financial education. Life insurance is like a bounty! There are tax advantages to purchasing life insurance like income-tax free death benefits, tax favored loans and withdrawals and tax deferred growth. In addition, life insurance helps you in protecting your other assets – like your home, car etc. It’s not the case that people are unaware of these advantages. 86% of total surveyed by 2016 Insurance Barometer Study agree that most people require some amount of life insurance coverage. It’s either carelessness or tough finances which tie their hands.

Facts reveal that most Americans overestimate the cost of life insurance. 83% of the insured person resist investing more in the policies because they assume that the cost is too high. In reality, the cost is almost one third ($150) of the amount estimated by Americans ($400). This again stresses over the need of financial awareness among masses and makes it important for everyone to do the research before making any decision.

Two out of three individuals owning life insurance agree that it brings peace of mind. This relaxation is result of real benefits that life insurance provides. According to an estimate , average amount of life insurance coverage of an American adult is $167,000 whereas average mortgage debt on people is $209,000. With this huge amount in debt, if a person has invested more than half in some insurance which will definitely be paid later (that is true! In 2013, life insurance companies paid more than $548,000,000 in benefits) to pay debt, why wouldn’t one have peace of mind?

Death is like a sword hanging over our heads all the time. It is real and those who do not see the threat maybe fooling themselves. Death comes at the most unpredictable moment and loss of a beloved one is enough to break a family, let alone the financial storm that follows. Facts from LIMRA show that 31% Americans believe that the financial impact of death of wage earner is felt within the first month. Why not make this impact as little as you can for your loved ones? Invest the time and sweat in weighing your options, choose your insurance policy intelligently and leave your family secured if the unseen should happen.