In 2004, the nonprofit organization, Life Happens, designated September as Life Insurance Awareness Month to help educate Americans about the importance of life insurance.
For the past nine years, a key component of this awareness campaign has been the Insurance Barometer Study1, an annual study which tracks the perceptions, attitudes and behaviors of adult consumers in the United States.
The 2019 Study found lack of product knowledge affects perceived need and ownership.
The study examined consumers’ knowledge of insurance products, perceived needs and ownership of insurance. Overall, of the insurance and financial products included in the study, consumers are most likely to say they are knowledgeable about life insurance (46 percent).
The study also found only 57 percent of Americans have life insurance, and four in 10 households without it would immediately struggle to pay living expenses if their primary wage earner died.
Though more consumers are comfortable in their knowledge of life insurance, there are two questions consumers commonly ask:
What’s the difference between Term and Whole life insurance?
Term insurance provides protection for a set amount of time, or term, and generally pays a benefit only if you die during the “term” of the policy. Generally, term life insurance is less expensive than whole life coverage. Premiums can increase periodically or stay level for the duration of the term policy, depending on your plan.
Term insurance can be a smart budget decision for people building a family because it allows them to buy a high level of coverage when the need for financial protection is most critical. It’s also a good choice for covering major expenses that are expected to disappear over time like mortgages and college costs.
Whole life is a type of permanent insurance that offers life-long protection and allows the policyholder to accumulate cash value on a tax-deferred basis. In contrast to term insurance, a whole life insurance policy remains in force as long as you continue to pay your premiums.
It’s a smart choice for someone who needs coverage for an extended period of time. You may have financial commitments still in place long after the children have graduated college or your mortgage has been paid off. For instance, your spouse may outlive you by many years and will need to deal with daily living expenses. Or you may want to be able to pass something on to your children or grandchildren.
Whole life insurance policies have the potential to build cash value over time as well as pay a death benefit to your beneficiary. The cash value grows tax-deferred while the policy is in force. The insured may use the policy as collateral, borrow against it or even borrow from it. Loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest.
What’s the difference between Individual and Group life insurance?
Individual life insurance is a life insurance policy that covers you as an individual. You pay for the policy and own it.
Group life insurance is life insurance for which a single contract covers a group of people. Usually, the policyowner is an employer or organization. Because the insurance risk is spread across more people, group rates are usually lower than those for individual coverage. Typically, employer-paid group life insurance isn’t portable. In most cases, when you leave a company, you lose the coverage. It stays behind with the job.
September is a great time to find the answers to your questions and determine what coverage best fits your family’s needs.
USBA is a not-for-profit association that provides affordable insurance and financial products and services for military personnel, Federal employees, National Guard and Reserve members, Veterans and their families. To learn more visit: www.usba.com or call 877-221-6841 8:00 a.m. – 4:30 p.m. Central Time, Monday – Friday.
1) 2019 Life Insurance Barometer Study by Life Happens and LIMRA