Hi! Remember me? It’s been a while since I’ve posted, but now that summer is (unofficially) over, I plan to write more. Not every week, but more.
September is Life Insurance Awareness Month (LIAM), something the industry uses to try to put life insurance on American’s radar. A 2021 study by LIMRA (Life Insurance Marketing and Research Association) indicates that 36% of Americans surveyed feel that they are underinsured and plan on addressing that problem within the coming year. While I applaud anyone’s desire to correct a problem, I have a couple of questions.
First, why not address it immediately, or at least in the coming week as opposed to the coming year? While the odds are excellent that most of us will survive the coming year, that is not guaranteed for any of us. The respondents indicated several reasons for delaying the purchase, including cost, other financial priorities, and concern about being able to qualify for it.
It is my experience that most people’s perception is that the cost of term insurance is higher than it actually is and the cost of whole life is lower than it actually is. The truth is, the annual premium for a 30 year old male with a preferred (second best) underwriting classification for a $1 million 20 year term policy is under $500; at standard, about $700. For females, it’s even less: $370 at preferred and $570 at standard. So cost shouldn’t be an issue.
As far as other financial priorities, what could be more important than protecting one’s family? Sure, college and retirement are legitimate financial goals, but they can be coordinated with life insurance planning to achieve some degree of synergy.
Not being able to qualify is obviously a deal breaker, but there are companies that specialize in impaired risk underwriting. Granted, the premiums would be significantly higher than the ones mentioned above, but in many cases, an offer will be made.
The second question I have is what is expected to happen in the next twelve months that will make the buying decision/process simpler? I had one prospect tell me he wanted to wait until his wife delivered to address life insurance. Why? Is life generally less chaotic after the baby arrives? Do a husband and wife usually have more time after the child is born? In this case, the baby will turn one in October and the prospect still hasn’t found the time to address his life insurance needs.
I can’t find the exact quote, but I remember reading something to the effect that “If something is worth doing, 99% of the time, the best time to start now.” That is certainly true with life insurance.
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