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 secure your family’s financial future. According to the Life Insurance Marketing and Research Association (LIMRA), only 31% of consumers say they are very or extremely knowledgeable about life insurance. Since insurance is complicated, the Iowa Insurance Division has developed the Save4Later website to help Iowans plan, earn, save, and retire by learning the basics of financial literacy and insurance concepts.
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.
According to LIMRA 60 million families don’t have adequate coverage and 59% of uninsured consumers say they need life insurance. 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. There are two main classes of life insurance coverage: 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 you for as long as you pay the premiums. 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.
Women are less likely to own life insurance with only 47% of women owning life insurance compared to 58% of men according to LIMRA, and only 22% of women feel very knowledgeable about life insurance. The Iowa Insurance Division has created SmartHER Money, a free resource available to educate and empower women about their finances.
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.
Learning about the role of life insurance in your financial plan is essential for protecting your family’s financial future.