Life Insurance: Are You Financially At Risk?
In today’s world, fewer Americans are purchasing life insurance than in the past, leaving many households vulnerable in the event of an unexpected death. According to a poll by Limra, only 52% of consumers had a life insurance policy in January 2023, down from 63% in 2011. Data from the National Association of Insurance Commissioners also shows a similar trend, with coverage dropping to 59% of households in 2019 from 69% in 1998.
At Extreme Investor Network, we believe that there is a significant protection gap where Americans are simply underinsured. Scott Shapiro, U.S. insurance sector leader at KPMG, highlights this gap by stating, “It’s absolutely clear to me there’s a very large gap here.” The main purpose of life insurance is to provide financial security for loved ones in the event of the policyholder’s death, with beneficiaries receiving a tax-free death benefit.
So, why are life insurance purchases steadily falling? There are various reasons for this downward trend. One contributing factor is that younger generations are delaying major life milestones like marriage, homeownership, and having children. These events typically serve as triggers for individuals to purchase life insurance. Additionally, rising costs for homeownership, childcare, and student loan debt may make it challenging for younger households to afford monthly insurance premiums.
Furthermore, the complexity of the insurance transaction, including factors like medical testing for underwriting, can also deter individuals from buying life insurance. While there are other tax-advantaged savings options available today, life insurance still remains a crucial component of financial planning.
At Extreme Investor Network, we emphasize the importance of considering your financial situation and the standard of living you want to maintain for your loved ones. Whether it’s covering day-to-day expenses, debts, or big-ticket items like tuition, life insurance can provide the financial protection your family needs in your absence.
When it comes to choosing the right type of life insurance, there are two broad options: term and permanent. In most cases, term insurance is recommended for consumers as it offers fixed monthly premiums for a specified term. Permanent life insurance, on the other hand, is designed to last throughout life and may be more suitable for individuals looking to leave a financial legacy or anticipate future health issues.
Determining how much life insurance to get is a personalized decision that depends on your financial goals and obligations. Whether you aim to replace lost income, cover debt obligations, or fund your children’s education, life insurance can provide the necessary financial support for your loved ones.
At Extreme Investor Network, we understand the complexities of life insurance and are here to help you make informed decisions about your financial future. Stay tuned for more expert insights and advice on maximizing your investments and securing your financial well-being.