Consumer Connection: Why Life Insurance Matters

Russell Gibson, Consumer Advocacy Officer for the Iowa Insurance Division

By Russell Gibson, Consumer Advocacy Officer for the Iowa Insurance Division 

September is Life Insurance Awareness Month—a great time to review your family’s financial safety net. According to LifeHappens.org, 41% of adults say they know little to nothing about life insurance, and over 100 million Americans either lack coverage or need more.

At its core, life insurance pays a tax-free benefit to your beneficiaries after you pass away. It covers immediate expenses like funeral costs and medical bills, helps pay off ongoing obligations like a mortgage or tuition, and helps preserve generational wealth.

Coverage is essential for both working and stay-at-home spouses. While an earner's policy replaces lost income, a stay-at-home parent's policy provides the funds needed to pay for ongoing childcare and household management.

Comparing the Two Main Types

  • Term Insurance provides affordable protection for a fixed period (such as 10, 20, or 30 years). However, renewing after the term expires often comes with a steep price increase.
  • Cash Value (Permanent) Insurance offers lifelong coverage paired with a savings or investment component that can grow over time. Common versions include Whole, Universal, and Variable life.

Essential Rules for Buyers

  1. Don't Rely Solely on Workplace Insurance

Employer-provided life insurance rarely offers enough coverage, and you often lose it the moment you change jobs. It is good practice to generally treat job-based coverage as a secondary bonus while owning an individual policy that you control.

  1. Take Advantage of the "Free Look" Window

After receiving a new policy, you get a 10-day review period (extended to 30 days if replacing an existing policy) to return it for a full refund if you change your mind.

  1. Buy Earlier to Lock in Lower Rates

Premiums are based on your age, health, lifestyle, and coverage amount—meaning rates are significantly cheaper when you are younger and healthier.

Helpful Resources

If you are looking for missing coverage left by a deceased individual, the National Association of Insurance Commissioners (NAIC) offers a free online Policy Locator tool. For broader guidance on planning and retirement, the Iowa Insurance Division provides free educational resources through its Save4Later and SmartHER Money initiatives.