How to Close a Life Insurance Gap

Life Insurance Facts

Do you have a life insurance gap?

Are you one of the millions of employees in the U.S. who has life insurance through your place of employment? You may think you have enough coverage, but do you?

Currently, more than half of private businesses offer their employees life insurance plans, and nearly all eligible employees are enrolled.1 Even though so many take advantage of this benefit, 50 percent of American households don’t think they have enough life insurance.2 Are they right?

How to Close a Life Insurance Gap

Life insurance purchased through an employer can be a convenient, cost-effective option, and it often doesn’t require a medical exam.

However, tying your life insurance coverage to a job could leave your coverage at risk in the event of layoffs or changes in company benefit plans.

If you were to get sick or injured and had to leave work, your group life insurance coverage could terminate, just when you may need it most.

In addition, group life insurance policies typically have low limits. Many financial professionals recommend a death benefit equal to 7 to 10 times your annual income.3

However, many households rely solely on employer-provided coverage, which may only replace up to twice your yearly income.

The takeaway is this: 50 percent of consumers are probably right, they are underinsured, potentially affecting their ability to pay bills, send their children to school and meet other financial obligations.

So, how do you get the life insurance you need, beyond what your employer may provide?

Close the gap
For many families, personal life insurance may help fill gaps in employer group coverage and provide financial security in case of cutbacks or job changes. You can choose your own insurance provider, lock in rates and have consistent, flexible coverage.

Exactly how much life insurance you need depends on factors such as your assets, your debts, and your family’s other sources of income. You’ll be able to choose between term and permanent life insurance and maybe even receive cash-accumulating benefits.

When it comes to life insurance, cheaper isn’t always betterFInancial Disconnect
The cost of life insurance can vary widely from company to company, even for the same amount of coverage. And if coverage appears to be the same, why should you pay more?

Here are some factors to consider when selecting an insurance company:

  • Company strength — Life insurance is a long-term investment, so it’s vitally important that you select a provider with a history of financial stability. Companies such as A.M. Best, an insurance rating agency, provide up-to-date information on the financial health of most life insurance companies.
  • Company size — Does size matter? Yes and no. Although past performance does not guarantee future results, most of the largest insurance companies have been in business for decades, and some date all the way back to the 1840s. When a company has been in business that long, it’s reasonable to assume that it understands the complexities and nuances of the insurance business, is able to manage risk and grow assets, and has a history of meeting long-term financial obligations. Farmers Life has been meeting its obligations to customers since 1910.
  • Agent relationship — Life insurance can be complicated. My goal is to help you find a life insurance policy that best meets your needs based on your family obligations, finances, health, and personal circumstances. Once you purchase your coverage, my goal is to keep the conversation going. We’ll get together annually — or sooner if your life situation changes — and review your policy so you can be sure you have the coverage you want based on your current circumstances.

Life Insurance - No RegretsNo matter which company’s policy you decide to purchase, make sure you understand what you are buying. Learn all you can about life insurance because it’s worth knowing about. And remember, the more you know, the better you can plan for the future.

A free service that I offer is a Farmers Friendly Review®, an opportunity to get together and go over your insurance program so you can determine whether your coverage is aligned with your needs. Call me, and together we can work to find life coverage that’s right for you.

 

Michael Binns Insurance Agency Card

 

1http://www.bls.gov/news.release/ebs2.t05.htm

2http://www.limra.com/uploadedFiles/limracom/Posts/PR/LIAM/PDF/Facts-Life-2013.pdf

3http://www.bankrate.com/finance/insurance/how-much-life-insurance-should-you-buy.aspx