Never a good time to drop life insurance coverage

May 09, 2011

Business owners in particular ought to hold on to their life insurance policies despite the rough economy

With the economy still recovering slowly, many Americans may have chosen to forgo life insurance to save money. It's a mistake that could cost them more down the line, according to a report.

Experts told USA Today many Americans are making a costly choice in passing on life insurance, since the absence of such a policy could actually create even more financial harm in the event that a primary breadwinner passes away or becomes unable to work. It's an especially poor decision considering that rates on term life insurance are falling, said the report. In 1994, a 20-year term policy for a healthy 40-year-old male would cost $995, today, that same policy would be just $355, said the report.

Permanent life insurance policies, meanwhile, could offer extended benefits, especially for business owners. Jacques Laventure, owner of a fitness club, said he was surprised how beneficial a policy could be for him when he looked up life insurance quotes.

"That enlightened me about how business persons can use it as a tax shelter," he told the source.

Data from LIMRA, an insurance industry group, showed just 44 percent of U.S. households have individual life insurance.

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