When is life insurance awareness month?

LIAM, or Life Insurance Awareness Month, is in August every year. The insurance industry started the event as a way to improve people’s awareness of the importance of life insurance in 2003. The big problem right now is that too many people are skipping this one product that may prove most useful if they are taken from their dependents prematurely. The truth is that most American households have abysmal saving habits coupled with a rising cost of living, stagnant wages over decades’ time, combined with a rough economic climate for more than five long years now. In addition, many people who need life insurance do not buy it. Start comparing life insurance rates now by using our FREE tool above!

Many financial gurus give advice that says if you have no dependents you have no use for life insurance. The problem with this advice is that it assumes you cannot make good use of the other aspects of a life insurance policy. True, if you are buying term life insurance only, then you have no reason to purchase it unless someone is relying upon you for an inheritance to live off of if you pass away. Term life insurance is defined simply by the amount of time your contract lasts, or its term. Each policy may pay out a different rate of benefits, depending upon your policy details.

A Financial Guru Said

There are plenty of financial gurus out there, who make a pretty penny proffering up their advice to people everywhere. They make money when they write books, have a popular website, sign hefty television contracts, or appear on satellite radio shows. Now, it pays that they tell the truth.

Sometimes, though, they might focus on the particulars of numbers to the detriment of their followers. It may not be intentional, but it can be harmful. You may have experienced a couple of their pitfalls in the past decade. If you bought a home because it’s what you are supposed to do and had a job with benefits, you might have done a short sale or foreclosed after you lost your job.

If you wanted to access your once beloved 401(k) funds, you saw the value of those stocks drop, and then drop some more when your company took back its match because you were not vested. The typical time to earn vestment might be years. Did you know most employees do not get to stay with the same company for five years? That means you are most likely never going to see that match money. Now, these financial minds mean well, but when they speak poorly of life insurance they are missing a big opportunity to help you.

According to high-profile financial experts, they might say you would do better in the markets alone, or that the fees for life insurance are higher than just investing on your own. Compounding interest, the power of time in the markets, and similar statements are theoretically correct.

Yet, the Great Recession hit Baby Boomers who were perhaps about to retire, and they were thrust back into the workplace, at menial jobs. The likelihood of markets meant nothing to them because they suddenly had to cash out their retirements and pay government and trading fees to their money to live. Government rules are stringent, and can be changed at any time. Hard to pin your financial planning on that.

If you are like most people, investing on your own or saving the money yourself is dangerous. The traders on Wall Street have information before you do that may not come out from even the business news channels until a day or two later. They know how to read market data, and have the power of volume trading with them. In addition, there will always be a newer electronic toy, a need for a newer car, unexpected dental work, and that much-needed vacation. So it is a combination of temptation and naivete that can be a toxic combination for your money.

Even going beyond personal willpower, or whether you are able to save on your own or struggle, life insurance provides a full array of products all in one premium payment. In addition, most plans that build cash value provide a guaranteed return, something you cannot expect if you expose yourself to the casino called the stock market. For instance, you might want to determine the cost of the following individually to understand the value of what life insurance offers you:

1. Long-term care insurance
2. Funeral benefits
3. Mortgage payoff insurance
4. Term life insurance for your children’s dependent years
5. Education for your kids
6. Retirement
7. Cash for a rainy day

Permanent life insurance policies offer long-term care insurance commonly as a rider. In addition, there is something akin to a terminal rider as well that many insurers offer. It means that if you have a terminal illness you can cash out the death benefit for your own purposes, such as medical bills.

Old Wives’ Tales Hold Truth

The other issue with investing is that if you put too many of your eggs in one basket, you may fall short of your needs in one area. You simply cannot predict whether your husband will need to replace your income to care for the kids, if your house will need to be paid off, and he will need money for your funeral.

Did you know that people today may not require long-term care assistance for the rest of their lives? It is much more likely that if you do need it it would only be for up to five years. Then again, the difference between one year of around-the-clock care versus five is huge.

Can you realistically afford to save for each of these possibilities while subsisting on your income for today too, or would it be uncomfortable, potentially impossible, and actually cause a huge cash flow issue for you?

The latter item there is a key: cash flow. That is one of the practical items that well-meaning financial professionals forget. It is something even businesses struggle to maintain. It is basically how much income you have versus expenses. You may have a six-income salary now, but if it is wiped away because a phone app can do your once-esteemed job that required an advanced-degree you might be otherwise out of luck replacing that income. That can put a crimp in your lifestyle and the cash flow formula too.

Benefits of Life Insurance

Life insurance and all the products you can roll into a life insurance policy are like the sad job example. Life is full of unexpected events, both good and bad. Insurance’s purpose is supposed to keep you or loved ones on even financial footing. While most people will never need to file the dreaded death benefit claim, there is much value for the living and the policyholder with today’s life insurance policy choices.