Most of us have been forced, at one time or another, to make financial compromises because of the lack of funds to take care of all the bills at once. Sometimes you have to “rob Peter to pay Paul” in order to keep the water flowing and the lights on. Your intentions are always to make up the difference later, when the money is available, to catch-up on the payments due to your neglected debtors.
Unfortunately, this has become a way of life for many Americans, especially now that the economy is in turmoil. Unemployment is still around 9% and more jobs are being lost everyday – pay raises have been frozen for the last 18 months for many workers. Although the overall inflation rate has been flat during that same time period, many day-to-day expenses still continued to increase. The price of , for example, continues to climb and the monthly now rivals your auto payment. Today, compromise has become most workers only recourse to dealing with the household’s expenses.
Income Protection is Vital
Income protection (a more descriptive term for life insurance) is still one of the most important expenses a family has. Why? Consider what the sudden loss of a working parent could mean to a family’s financial future. We’ve put ourselves in a situation where our households generally require two incomes in order to cover our daily expenses. So when that source of income is effectively cut in half, financial devastation is imminent. If you’re a single parent, then “life insurance can be twice as important,” says USA Today. Yet, 69% of single parents with children living in the house have no life insurance at all, based on a study done by Life & Health Insurance News. That means if a premature death were to occur to that parent and their source of income stopped, the children left behind will suffer both emotionally and financially.
Therefore, whether you’re married or single, you need to make sure you stay properly protected at all times. The best way to do that is with low-cost — it’s the most cost-efficient way to get coverage because it costs five to ten times less than whole life and other cash-value insurance policies. And when money is an issue, value becomes the most important buying decision.
What is Proper Protection?
Many people use the term “” as a generic description for a set amount of life insurance. But there’s nothing generic about being properly protected. Proper protection is best described as the amount of insurance your household needs to replace your income and cover any additional expenses caused by your premature death.
To be truly properly protected requires you to sit down with your life insurance agent/advisor and let them perform a financial needs analysis customized for you based on your particular household budget. This, in my opinion, is the primary reason why many Americans are underinsured today. Most Americans aren’t talking to the right people about their financial needs. Instead, they get , family members and social media. That may be fine for advice on a good college to attend, which car to buy or which chocolate chip cookie recipe to use, but it’s a disaster waiting to happen when it comes to something as important as your family’s finances.
Most Americans Have No Professional Financial Help
Studies show that more than three-fourths of American households (77%) do not have a personal life insurance agent or broker, and 72% do not have a personal financial advisor or planner. And of those that do have a financial advisor or planner, only about half (49%) of them have ever spoken with their advisor about adding life insurance to their financial plan.
Americans do understand the need for life insurance because 74% of U.S. adults agree that life insurance is the best way to protect against the premature death of a breadwinner. But those same studies show that forty-four percent of all U.S. households (48 million) either do not own life insurance, or own life insurance but are under protected. Most Americans feel they have not received any information about life insurance that relates to their needs.
Insurance Professionals Can Make a Difference
Americans are buying almost everything off the internet these days but is it a good idea to buy insurance without a professional’s help? It would be if all insurance policies were the same, but unfortunately they’re not. Buying insurance can be confusing. Price is important, but so is getting the right coverage for your needs.
Determining what your needs are and what is covered by an insurance policy requires some knowledge of the industry. Most people have busy lives and not everyone has the time or desire to master personal finance and insurance. Yet that does not negate the importance of understanding or knowing what your insurance needs are.
One of the most important roles of an insurance agent/advisor is to determine your specific needs. They will gather detailed information about you and your needs using a tool commonly called a financial needs analysis to identify which insurance policy is best suited for you and the proper amount of coverage that’s needed. Your agent/advisor will also make certain you are not purchasing coverage you don’t need, and therefore prevent you from wasting your money.
During economic times like these you don’t have to be like most Americans who go through life making blind decisions about their finances. An insurance agent/advisor is there to help you get the most value for your money. Contact your local agent/advisor to schedule an appointment to have your complimentary financial needs analysis prepared.