September is Life Insurance Awareness Month, making it the perfect time to revisit one of the most important components of a financial strategy: protecting the people you care about most.
For many individuals and families, life insurance is often viewed as something they'll get around to later. One of the biggest reasons? Cost.
According to a recent study from LIMRA and Life Happens, 41% of Americans say they don't have life insurance because they believe it's too expensive. Yet when asked to estimate the cost of a $250,000 term life insurance policy for a healthy 30-year-old, respondents typically guessed the premium would be about three times higher than the actual cost.
The reality is that life insurance is often much more affordable than people expect.
Why Life Insurance Matters
Life insurance provides financial protection for the people who depend on you. In the event of your death, policy proceeds can help loved ones manage financial obligations and maintain their standard of living.
Depending on your needs, life insurance may help:
Replace lost income and assist with ongoing household expenses
Pay off debts such as a mortgage, student loans, or other financial obligations
Provide financial security for family members during a difficult time
While the death benefit is the primary reason many people purchase life insurance, some policies may offer additional benefits that can support broader financial goals.
Life Insurance Can Do More Than Provide a Death Benefit
Permanent life insurance policies can offer features that extend beyond protection for your beneficiaries.
Certain policies may allow you to:
Build cash value on a tax-deferred basis over time*
Borrow against the policy's cash value for expenses such as a down payment on a home or college tuition
Create a potential source of supplemental retirement income*
These features can provide financial flexibility during your lifetime, making life insurance a tool that can play multiple roles within a comprehensive financial strategy.
Is It Time to Reevaluate Your Coverage?
Whether you're considering life insurance for the first time or reviewing an existing policy, Life Insurance Awareness Month is a worthwhile reminder to evaluate your protection needs and better understand the options available.
Many people are surprised to discover that coverage may be more attainable than they assumed and that certain policies can offer benefits beyond the traditional death benefit.
A thoughtful conversation about life insurance can help determine how coverage may fit into your overall financial picture and long-term goals.
*Source: LIMRA and Life Happens, Insurance Barometer Study
Disclosures
Loans and withdrawals will reduce the policy's cash value and death benefit.
The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges; if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Any guarantees are contingent on the financial strength and claims-paying ability of the issuing insurance company.
Life insurance permanent policies contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values. Loans are income tax free as long as a policy is not a Modified Endowment Contract (MEC) and the policy is not surrendered, lapsed, or otherwise terminated during the lifetime of the insured, and withdrawals do not exceed cost basis. Partial withdrawals during the first 15 policy years are subject to additional rules and may be taxable. Excess policy loans can result in termination of a policy. A policy that lapses or is surrendered can potentially result in tax consequences. You should consult a qualified tax professional for tax advice regarding your personal situation. All guarantees are based upon the claims-paying ability of the issuer.