When life is good, it can be hard to imagine it any other way. We tend to underestimate risk and find it difficult to plan for a future that might look different from now. Yet we all know that accidents exist, illnesses occur, and the unthinkable can happen when you least expect it. Life insurance remains essential precisely for these reasons—as a reliable way to protect your family against the unpredictable, so you can live your life with some peace of mind.
In 2020, we saw firsthand how quickly the world can change. The emergence of COVID-19 and its spread around the world left the lives of all profoundly shaken and served as a solemn reminder of the importance of having a life insurance policy in place. The circumstances of 2020 have put a special emphasis on this year’s Life Insurance Awareness Month as coverage becomes more important than ever.
More People Seek Life Insurance Due to COVID-19
As we have reported throughout the spring and summer, COVID-19 led to an enormous spike of interest in life insurance this year. It started around late February and early March and has not slowed much in the months since. Term life insurance seems to have had the largest purchasing increase, but more consumers are also learning about the advantages of features like living benefits to and indexed products to protect against market downturns.
One of the most noteworthy surges this year was an application increase of 20% in July for Americans under the age of 45 seeking life insurance. Attitudes seem to have changed across the board: a report by Lincoln Financial in July showed that 36% of the roughly 1,000 adults surveyed said that COVID-19 made owning life insurance more important for them. Furthermore, 9% of policyholders changed their type of insurance and 12% of those surveyed increased the coverage amount of their policies. Life insurance even rose above living expenses as a concern for some throughout the year.
Insurance companies have quickly adapted to the changing times, including enacting measures for social distancing, adding virtual consultations, and adjusting underwriting standards to reflect the state of the world. This could be a reason for the increase of interest as well, as younger generations have long been comfortable with making most purchases online, transitioning smoothly to shopping for insurance. In an impressive show of coordination and effort, our partners have been doing everything in their power to keep the surge of people who submit applications healthy and safe.
Why Do People Need Life Insurance?
Life insurance helps you provide for your family financially after your death. A policy is a contract with an insurance company in which you pay a set amount called a premium, either all at once or in monthly, quarterly, or annual sums. This money is then paid to your family upon your death, usually as a lump sum called a death benefit. You get to choose your beneficiaries at the time of purchase and change them at any time.
Your family can then use the death benefit to fulfill their needs. It serves as a replacement for your income and most often pays for funeral expenses, mortgages, and medical bills. It can also fund a child’s education, be put toward a new home, or be used for simple living expenses. This is a safety net for your family to use however they decide, and the best way to provide for your family for as long as possible.
Life insurance is always useful, but especially when you have financial dependents. Other important times to consider buying a policy are taking out a loan for a house or car, getting married, having a child, and when approaching retirement. Ultimately, the time to get life insurance is always now, as the best policy is the one that is in place when it is time to file a claim. If something unthinkable were to happen to you, the last thing you would want is to leave your family with financial hardship on top of grief.
Beyond the Death Benefit
Life insurance does not have to stop at protecting your family after your death. Policies have come a long way from simply providing a death benefit over time. They now provide many features you can use while you are alive called living benefits. These riders can help you financially in cases of chronic, critical, or terminal illness or disability. Use living benefits to pay for things like:
- Medical bills.
- At-home care.
- Your mortgage or a new home.
- A new car.
- Everyday living expenses.
Some policies can also provide a stream of income for you to use in retirement. Over time, policies accumulate cash value, which you can borrow against with some financial planning. These withdrawals serve as an easy way to add to your social security and other retirement income streams. These payments are usually tax-free as well if you do not exceed the amount you’ve paid in premiums. These retirement and tax advantages should be discussed further with your agent in the process of choosing your coverage.
Getting Covered is Simpler than You Think
In all these ways, life insurance can both make your life easier while you are alive and protect the wealth of your family once you are gone. It can be uncomfortable to talk about death, but having that difficult conversation is worth it to give your family the financial security and peace of mind necessary to enjoy all that life has to offer. If you would like to learn more about how to get covered, you can connect with a First Financial Security agent today.
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