Guest Column: Are you uninsured and putting loved ones at risk?

Kockelman

Kockelman

About 40 percent of Americans have no life insurance. LIMRA, an insurance industry group analyzing insurance trends in the U.S., recently found that among men and women, ownership of life insurance policies has hit its lowest level since 2004. LIMRA’s most recent study shows 39 percent of men without even term life coverage, and 43 percent of women in the same boat.1

Alarmingly, the population of married men aged 35-54 who had life insurance dropped more than 10 percent from 2004-10. Men who fall into this age bracket are usually in or near their peak earning years, and about half of them are fathers.1

Another alarming finding from the survey: A third of new parents admit they have insufficient life insurance coverage, yet only about 40 percent try to rectify that problem within two years of the birth of their first child.1

Is it wise to live without life insurance? No. Is it hard to have a conversation about it? Apparently so.

Many parents would rather talk to their kids about drugs than life insurance. So reports Bloomberg, citing a survey from State Farm released at the start of this month. The poll (compiled by Harris Interactive for the insurer) showed 55 percent of the 2,000 respondents would be comfortable discussing drug and alcohol issues with kids, but only 38 percent would be comfortable discussing a life insurance policy. As valuable as life insurance coverage can prove to be, it doesn’t appear to be a financial priority: only about a quarter of those polled said they would alter the family budget to accommodate payment of life insurance premiums, yet about half of respondents said they would revise their finances to afford cable TV and Internet services.2

There is no getting around it: a life insurance policy references death. That is why couples and families tend to avoid the subject. (Yes, couples without kids avoid it too — the Harris Interactive poll cited above also discovered that about three-quarters of them don’t talk about it.) Yet avoiding the discussion doesn’t solve the problem — and a real problem it is.2

If you have no life insurance and pass away, what kind of economic burden will your family have? Beyond the costs of the funeral and/or burial, your family loses income (perhaps its primary source of income) and has no financial wherewithal to meet the money challenges that the loss of a parent or guardian poses.

Permanent life insurance offers a death benefit plus the opportunity to build cash value over time. There are even tax perks in such coverage: Not only are the death benefits from the policy received tax-free, but the cash value has the opportunity to grow tax-deferred during your lifetime, and any loans taken against the policy’s cash value aren’t subject to federal income tax, because they aren’t considered cash distributions.3

Underinsured? Uninsured? If certain life events have caused you to think about insuring yourself, check in with an insurance professional this month. It represents the right thing to do for you, your spouse and your family.

Todd Kockelman, Retirement Income Certified Professional, is a registered representative with Packerland Brokerage Services, Inc., and may be reached at Todd@K-FFinancial.com or 651-204-0655.

Citations.

1 – limra.com/Posts/PR/Industry_Trends_Blog/LIMRA__Life_Insurance_Findings_and_Father%E2%80%99s_Day.aspx [1/13]

2 – bloomberg.com/news/2013-09-03/drugs-trump-life-insurance-in-parent-child-conversations.html [9/3/13]

3 – newyorklife.com/products/tax-advantages-permanent-life-insurance [9/16/13]

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