Life Insurance Forms the Basis of a Solid Financial Strategy
Build Your Financial Future on a Solid Foundation: Life Insurance
If you want to build a strong structure, you need to begin with a solid foundation.1 The same applies if you want to create a financial strategy that will bring you and your family security and peace of mind.
It may surprise you to learn that the foundation of a solid financial plan is life insurance, but you wouldn’t be alone. Many people still see insurance as simply a risk-management product, but it is so much more.
September is Life Insurance Awareness Month, an annual campaign coordinated by the non-profit Life Happens organization. Throughout the month, financial services providers, such as First Financial Security, Inc., and life insurance agents will work to get the word out and raise this important financial product’s profile. For its part, First Financial Security will share videos and information on its company website, to help people learn more about how and why they should incorporate it into their financial plans.
Life Insurance is still the most effective way to protect your family in the event of death or disability. But, don’t overlook its ability to help with wealth generation, protection and transfer, as well as to provide you with access to money when you need it most.
Innovative components, riders and benefits have redefined life insurance. New “living” or accelerated benefits are only the latest offering to this important part of your overall financial strategy.
Yet, despite the protection, added value, flexibility, and tax advantages insurance offers, overall ownership is at a 50-year low.2 More than 40% of Americans have no life insurance. These are only two of the findings brought to light in the 2015 Insurance Barometer Study, conducted by LIMRA and Life Happens.2
By educating people about life insurance, LIMRA, Life Happens, and First Financial Security, Inc. believe this trend can be reversed. When people gain the confidence and knowledge they need to make smart decisions about what and how much to buy, they’ll be ready to purchase insurance.
Other troubling statistics emerging from the survey, include:
- 80% of consumers of all ages have an inflated view of the cost of insurance
- 4 out of 10 admitted to being intimidated by the process of buying insurance
- 30% of those currently owning life insurance don’t believe they have enough to cover life’s unexpected events and challenges2
Cost remains the top reason people cite for not owning insurance, with many assuming it’s much more expensive than it actually is. Millennials surveyed overestimated the cost of purchasing life insurance by 213%, with Gen Xers close behind, believing it to be 119% higher that the actual cost.2
Without realizing insurance can cost as little as $1 per day, 2 consumers have shifted their priorities away from protection and security. Instead, they are earmarking that money for other priorities, such as saving for a vacation, going out to eat or the movies, shopping, or simply paying for expenses.
For the younger demographics, this misconception could be costly. Age is one of the most important factors in determining the cost of premiums. Youth, good health and the prospect of keeping the policy in force for a long time appeal to life insurance companies. As a rule, the younger you are when you purchase your policy, the less you’ll have to pay. 3
The one-third2 of Americans, who thought they didn’t have enough insurance, also admitted to being intimidated by the process of actually buying it. They simply didn’t understand what they needed and why. Many also didn’t have a trusted financial representative to turn to for guidance.
What’s most concerning about this situation is more than 43% of Americans said they would feel the financial pinch within six months if their household’s primary breadwinner died.2 To lose a mother or father is devastating, but when that individual was the primary or sole source of income for a family the loss could be catastrophic.
It doesn’t have to be that way. With the proper type and amount of life insurance, the families left behind could stay in their homes and have money to cover their day-to-day expenses. They wouldn’t have to put plans, such as going to college on hold. Most importantly, the money would have been there to pay for costly funeral expenses.
But what of the people who purchased insurance when they were just starting out, never missing a premium over the years to ensure their families were protected. Unfortunately, many people age 50 plus are letting their policies lapse once their children are grown and have left the
Dropping a policy at this point just doesn’t make sense. With the added value and flexibility life insurance provides, middle-aged and older adults should keep their policies active. While it may need to be converted, these policies have the power to have an impact now and in the future.
One of the biggest fears older Americans have is that they will outlive their retirement funds. Life insurance can be used in a retirement strategy that will provide financial security and the peace of mind that comes with it.
Life insurance also can have a generational impact. By maintaining insurance coverage, older adults can leave a legacy for their children and their children’s children. With so many types of insurance products available today, it’s important to find the one that will best meet your needs and your situation. But not all products are created equal. This is where your trusted, licensed First Financial Security representative can help.
First Financial Security believes knowledge is power. We are committed to ensuring all Americans, including our FFS representatives, get a solid financial education. We want you to be an active participant in the creation of your family’s financial strategy. This means you need access to the latest product information, so you can understand the ins and outs of life insurance and other financial services products and make decisions that make sense for your family financially.
Becoming financially literate will transform not only your life, but also the lives of future generations of your family. By learning how financial products, such as life insurance, work, you can find the best price and purchase what you need to protect your family.
The first step is to become educated, then set financial goals for your family, your money and your future. Meet with a First Financial Security representative you trust. Have him or her show you what’s available, then complete your due diligence. Only you can determine what’s best for you and your family.
Do these things, and you soon may find the peace of mind that comes from knowing that your family’s financial future is built on a solid foundation.
1 Paraphrased from quote: “You can’t build a great building on a weak foundation. You must have a solid foundation if you’re going to have a strong superstructure.” Attributed to Gordon B. Hinkley, 20th century Religious Leader.
2 “2015 Insurance Barometer Study.” LIMRA and Life Happens. April 14, 2015.
3 Kevin Mercadante.“Reality check: Buying Life Insurance Young Saves Money.” Money Under 30. http://www.moneyunder30.com/buying-life-insurance-young-saves-money