The importance of life insurance cannot be ignored

Sep 28, 2011

Currently, 30 percent of U.S. households do not have enough life insurance coverage.

Life insurance is often viewed as the core element of financial planning. Coverage can ensure personal assets are protected, policyholders have funds in case of an emergency and beneficiaries are financially secure in the event of a death. Yet, LIMRA research found 30 percent of U.S. households do not have any life insurance coverage - a 50-year low.

Washington state news provider the Spokesman-Review recently reported that life insurance does not only protect children and other dependents, but it could apply to any beneficiary the policyholder selects. There are two types of policies to choose from: term and permanent.

Term policies allow consumers to pay a monthly payment for a set period of time, which is a more flexible policy with lower premiums. Permanent or whole life insurance has higher premiums and can be used as a savings account or investment unit. Policies are able to be changed between the two types, allowing for policyholders to eventually upgrade to whole life insurance as their income and assets increase, the news source reported.

In addition, long-term care is often not covered by Medicare or health insurance, leaving many retirees to pay for services out-of-pocket. Life insurance policies can be cashed in to alleviate some of the costs of long-term care, so policyholders do not have to sacrifice their standard of living if they fall ill in their later years, Insurance News Net reported. Many life insurance policies come in a long-term care package, combining coverage for care with life insurance or annuities.

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