Understanding a crucial benefit during Life Insurance Awareness Month
CHATTANOOGA, Tenn.--(BUSINESS WIRE)--
This week an insurance research firm reported thatownership in
life insurance has reached a 50-year low, with nearly a third of U.S.
households not having a form of this financial protection. As the
benefits industry begins Life Insurance Awareness Month in September,
Unum (NYSE: UNM) shares the concern that this decline exposes working
Americans to financial uncertainty.
“Life insurance is one of the building blocks of a solid financial
plan,” says Debbie Cecil, director of life products for Unum. “But it’s
not a one-size-fits-all benefit, so understanding the types of coverage
that are available, and when they’re important, can be daunting. When
you add in the extra pressure we’re feeling with the economy, many
people are apparently just turning away from pursuing this coverage.”
According to LIMRA, an insurance and financial services consulting and
research firm, more than 40 percent of Americans say a major reason they
have not bought more life insurance is because they have other financial
priorities right now, such as paying off debt or saving for
retirement. As a result, there are 11 million fewer American households
covered by life insurance compared with six years ago.
Life insurance is frequently offered in employee benefit packages
provided by employers. As economic pressures force employers to trim
budgets and benefits, individuals can purchase additional life insurance
coverage through other workplace offerings, or through individual
insurance advisors. And these voluntary life plans are individually
owned, so employees can keep their coverage should they change jobs.
“Workplace offerings are also flexible in ways that should appeal to
those feeling financial pressures,” Cecil says. “Some policies will
guarantee an option to purchase a specific amount – also known as a
guarantee issue – but allow you to purchase it in incremental amounts
each year during re-enrollments, even without a health exam.”
Like most voluntary workplace benefits, it is critical for employees to
understand the different types of life insurance available, as well as
how much coverage is needed and when. Here’s a breakdown:
For young, single workers who don’t have many financial obligations,
term life coverage is usually adequate and affordable. The policy lasts
for a defined period of time called the term, and is in force as long as
premiums are paid. A term life policy does not accumulate cash value.
Rates typically go up as the policyholder ages.
- Interest-sensitive whole life insurance
Interest-sensitive whole life offers premiums that will never change,
and the policy is in force as long as premiums are paid. These policies
also accumulate cash value. With term life as a foundation,
interest-sensitive whole life is a nice complement, providing additional
coverage as individuals get older and financial obligations grow. It may
even include riders that could help cover the costs of long term care.
Universal life premiums are flexible and can be adjusted to fit an
individual’s changing financial lifestyle. So premium contributions can
be adjusted to balance against costs for caring for aging parents,
college or saving for retirement. These policies also accumulate cash
value and may even include riders that could help cover the costs of
long term care.
The decline in ownership of life insurance runs counter to what we
think: According to a survey by the LIFE
Foundation, a nonprofit agency, 93 percent of Americans think it’s
important for most people to have life insurance.
“The challenge lies in helping people move from understanding that this
coverage is an important way to protect our families to helping them
purchase the right coverage,” says Cecil. “Making the options clear and
affordable are major steps in closing that gap.”
Life Insurance Awareness Month (LIAM) is an industry-wide effort
coordinated each September by the nonprofit LIFE Foundation.
About Unum
Unum (www.unum.com)
is one of the leading providers of employee benefits products and
services in the United States and the United Kingdom. Through its
subsidiaries, Unum Group paid approximately $6 billion in total benefits
to customers in 2009.
Source: Unum
Contact:
Unum
Dawn McAbee, 423-294-1892
dmcabee@unum.com