September is Life Insurance Awareness Month, which aims to increase awareness about the importance and helpfulness of having life insurance coverage. Over the years, life insurance has become an essential way to protect one’s financial life. In fact, 84% of people believe that the majority of people should have life insurance.1 Yet, 40% of people haven’t bought life insurance or increased their coverage because they don’t understand the options or how much they need for protection.2
In honor of the month, here are some facts about life insurance to help you better understand it’s history and coverage.
1. Life insurance coverage started in the U.S. in the late 18th century
Believe it or not, life insurance is a centuries-old financial product founded in part by one of America’s Founding Fathers, Benjamin Franklin. After being instrumental in creating the first fire insurance coverage for homeowners, Franklin helped launch the first life insurance company in 1759, the Presbyterian Ministers' Fund, located in Philadelphia, Pa. At first, many religious authorities criticized the policies, believing one shouldn’t put a financial value on a person’s life. But their perspectives evolved once it proved to offer helpful financial protections for widows and orphans, creating a legacy in America for protecting people’s lives through life insurance.3
2. Almost half of Americans don’t have life insurance
Fast-forward to 2017, and life insurance is an essential tool for helping people to avoid financial instability. Unfortunately, many people still don’t have enough coverage to help fill financial gaps. Of those with a policy, 48% of households (60 million) have an average of a $200,000 gap in their coverage. Why? Almost two-thirds of people state that coverage is too expensive for them, while more than 7 in 10 households are focusing on other financial priorities like paying off debt.4
3. Two different options exist for coverage
When buying life insurance, people have 2 different options: term and whole life/permanent. Term life insurance is good for basic financial coverage, and you receive the payout only when the policyholder dies during the policy’s term. Typically, no other benefits come with term life. The next option is whole life or permanent insurance, which pays out no matter when someone dies and no matter how long you live. Permanent can pay cash value should the policyholder wish to cancel it at any point. Both policy types come with additional variations to the policies.5
And you can even purchase both term and permanent insurance at the same time to maximize your coverage, should it support your unique financial needs.6
A variety of factors will affect what type and amount of coverage is best for you and your family. If you don’t yet have life insurance coverage or would like to explore if you have adequate coverage, we’re happy to help.
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