Lewis & Ellis, LLC

Illinois residents lacking in life insurance

Life Insurance and Annuities
by Dave Palmer
Can life insurance bounce back in a downturn?
Can life insurance bounce back in a downturn?

While millions of Americans have life insurance, millions more do not. However, most financial experts agree that just about everyone is going to benefit from having it, and it's up to life insurers and agents to bridge that coverage gap in a number of different ways. This issue was recently reflected in a poll of Illinois residents, of whom there were a significant number who neither had nor saw the value of life insurance.

Indeed, about 40 percent of Illinoisans do not have life insurance at this time, and close to 1 in 4 said that they don't even see the need for such coverage in their lives, according to a the latest AAA Consumer Pulse survey. However, when taking a look at why these people are going without coverage or simply don't even want it, those who are in the life insurance field will recognize the reasons all too well. This only serves to highlight the fact that - as pointed out by Michael Fletcher, assistant vice president of life insurance operations at AAA - this type of coverage is often crucial and people don't seem to fully understand its utility.

What do people think of it?
The vast majority of respondents - 62 percent - believed that a term life policy of $250,000 would likely cost them at least $200 per year in premiums, a dramatic overestimation of the price, which is commonly seen from the general public in life insurance polls, the report said. In fact, for most non-smoking young adults, these policies can be obtained for far less than that, usually in the neighborhood of $150 for an entire year.

In addition, many of those polled also said that they personally had no need of life insurance because they stayed at home with their kids and therefore didn't have any income that a life policy would necessarily replace, the report said. However, because of the cost of child care these days, policies for stay-at-home parents are growing more important because someone is going to have to watch the kids in the event that something bad happens.

Consumers may need extra knowledge about life insurance.Consumers may need extra knowledge about life insurance.

Other issues
Meanwhile, 63 percent of those polled said that they don't need to buy their own life insurance because they have policies for it through their workplace, the report said. However, these plans usually aren't going to provide death benefits that are big enough to cover all their families' needs. Instead, experts generally see this kind of coverage as a good jumping-off point for people getting into buying life insurance - in that it can familiarize them with the process of dealing with such coverage and getting a good idea of what it should cost them - but will typically need to be built up above and beyond these benefits going forward.

The more life insurance companies can do to dispel many of the myths that circulate about this kind of coverage, the better off they're likely to be when it comes to boosting policy numbers going forward. This may be especially true as the economy continues to improve.



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