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The shifting role of life insurance over the years

Life Insurance and Annuities
by Jeff Lee
Life insurance ownership at lowest point in 10 years?
Life insurance ownership at lowest point in 10 years?

While many people may not fully understand the ways in which the right life insurance policy can benefit them, the general consensus among most consumers is that life insurance does provide plenty of financial protection. However, another potential area of disconnect between financial realities and what people do when they get life insurance is the idea that such coverage can be somewhat described as "set it and forget it."

It's important for people to not only sign up for life insurance when they have financial concerns such as outstanding student loan balances, a mortgage, children or other family members to protect, etc., but to also make sure they regularly revisit those needs, according to financial advice columnist Rick Bloom. Life insurance certainly isn't one-size-fits-all, and a family or individual's needs must be considered any time there is a major life event.

For instance, if a person is going from being single to getting married, it's wise to look into how that will change their financial needs with respect to life insurance, the report said. The same is true of buying a home, having a child, getting divorced and so on. A good rule of thumb here is that, any time a person's tax filing situation changes, it becomes wise to reevaluate life insurance as well.

Simply taking a look at life insurance options can help consumers make better financial decisions.Simply taking a look at life insurance options can help consumers make better financial decisions.

Other things to consider
Of course, where taxes are concerned, there has recently been a tectonic shift in how many Americans are affected by the federal tax code, according to the Oklahoma City Oklahoman. When the tax reform efforts in late 2017 finally passed, many financial experts noted that it would change the ways in which some Americans would need life insurance. That is to say, many people who previously invested in permanent life insurance as a means of building and preserving wealth may not need to do so any more because of how the estate tax has changed.

However, those who have or are considering term life insurance - which is significantly more affordable in terms of premiums, especially for younger adults - would likely not be as broadly affected, the report said. Those whose coverage is designed to last for the rest of their lives, however, may need to consider their options to ensure long-term financial success.

What to keep in mind
The fact of the matter is that most financial experts believe life insurance is a good idea for just about everyone, because the variety of options available from policy providers gives just about all consumers the flexibility to make an effective decision, according to the Price Sun Advocate. However, due to the misconceptions about how much this coverage may cost and what kind of long-term financial protection it provides, there are all too many Americans who go without coverage that they might end up needing.

Because of these perception gaps, it might be wise for life insurance companies and brokers to do more outreach and educate consumers about their coverage options, particularly when it comes to the most affordable options they might have available.



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