By Sonya Sellmeyer, Consumer Advocacy Officer for the Iowa Insurance Division
September is Life Insurance Awareness Month and there is no better time than the present to make sure that finances are in order. In order to help with that, and since insurance is complicated, the Iowa Insurance Division works with EverFi to help ensure students and their families have tools to better understand important financial literacy and insurance concepts. The importance is real. Nearly one in three families said they would face financial challenges within a month if the primary wage earner died.
Life insurance pays a death benefit when you die to your named beneficiaries. Life insurance can be a safety net to avoid challenging times if a loved one who contributed earnings to a household passes away unexpectedly. You may use the payout to help cover funeral expenses, mortgage payments or rent, daily living expenses, college tuition, outstanding loans, and uncovered medical bills. It may also help preserve generational wealth. You may pick more than one beneficiary with different percentage payouts, or you may even designate a charity or church to receive the benefits. You will also pick a contingent beneficiary just in case the primary beneficiary has passed when the policy is paid out.
There are two main classes of life insurance: term and cash value. As the name states term insurance provides coverage for a period of time and is usually very affordable. Cash value life insurance protects for as long as you pay the premiums. Speaking with a licensed life insurance agent will assist you in determining the correct type and amount of coverage that is best for you and your financial situation. After receiving the policy, always review it and ensure you understand all the terms and conditions. You have a 10 day free look period on the policy where you can return it to the insurer and receive a refund. If the new policy is a replacement for an existing life policy, you have 30 days to review the policy. Also, do periodic reviews of all your insurance policies to ensure the amounts and terms still fit within your financial plan.
Caregivers commonly come across old life insurance policies in the possessions of a loved one. The National Association of Insurance Commissioners has a life insurance policy locator which is free and can assist with finding long lost life insurance policies of your deceased family member or loved one.
The life insurance industry is good for Iowa’s economy. Each day, life insurers pay out $22.8 million in life insurance and annuities to Iowa families and businesses, generating 51,400 jobs with 34 life insurance companies domiciled in Iowa and 420 companies licensed to do business in the state. The life insurance industry provides good jobs and long-term investment capital that spurs economic growth. Talk to one of these professionals today and ensure the financial future of your loved ones with the protection of a life insurance policy that fits your financial situation.