September is Life Insurance Awareness Month. Are your life insurance needs adequately met?
Webster’s defines adequate as that which is “satisfactory or acceptable in quality or quantity.”
I think that definition sets the tone for a discussion as to the right type and how much life insurance each person requires for adequate protection. Who decides if the protection is adequate is left to each person’s perception and knowledge of the topic. So I would ask anyone reading this article, “Do you think your life insurance protection is adequate for your needs?” I want to present a few stories for illustration.
I remember calling upon a couple to write some juvenile insurance for their children. At the completion of the application process, I asked them if they would like to discuss completing a needs analysis to determine if they themselves were adequately covered. The husband replied with pride that he was working in the oil business, and had several million dollars worth of term coverage for him and his wife. He had no other life coverage other than through his employer. This was during the Eagle Ford oil run, and the future looked rosy and bright for those working in the oil patch. Alas, all booms eventually become a bust, and this gentleman was one of those more than 10,000 folks laid off when the bottom fell out of the oil business. The life insurance coverage he had was not portable and he found himself with no coverage at all.
Group term life through your employer is a perk and if provided free is a great benefit. Americans usually change professions or employers three to five times in their lives. Most group term products are contingent upon employment with that company, and is either not portable when you leave, or if portable, the premiums are much higher. Always consider having a life insurance product that you own yourself that is not subject to the whims of company benefits. Many companies do not offer life insurance, due to cutbacks in employee benefits. How will you provide for your family’s future if you should die prematurely and leave your loved ones in financial crisis?
One of my agents wrote some juvenile insurance for a single mother who wished to put her daughter in the one of our awesome dance programs. The agent discussed individual coverage for the mother during the application process, at policy delivery, and later. The mother was working several jobs and kept putting the agent off. Not long after, the mother was killed in an auto/pedestrian accident. She had no life insurance coverage. The agent attended the funeral of this mother, where she expressed her condolences to the grandmother of the child and mother of the deceased. During the conversation the grandmother told the agent, “I wish you would have sold my daughter a life insurance policy.” This affected the agent greatly, but she had done all she could to persuade the child’s mother to consider adequate life coverage. Now the grandmother had to pay for a funeral, and the child would have to be raised by family members, with no financial support. No life insurance protection is much worse than inadequate protection, and costs less that many believe. A $100,000 term policy for a 28-year-old female costs only $11 a month, and would have gone a long way in providing financial support for this child.
Hermann Sons Life, like many life insurance companies, experiences clients surrendering or allowing policies to lapse. The reasons for such are varied, but I want to highlight a few.
The parent who calls in to surrender their adult child’s coverage, saying that they are “grown up now and have their own coverage,” and don’t need this policy. Most have no idea what kind of coverage their children have or how much. Remember the prior discussion about group term life through work? Now that their child is indeed “grown up,” this policy with Hermann Sons Life should be, and is actually, part of their total insurance coverage portfolio. These whole life products were taken out when children were young and healthy, with premiums locked in for a lifetime of coverage at a very low rate, which if surrendered can never be replicated again.
These policies will be there all through the insured’s life into retirement to provide for final expenses. Many provide for cash growth that may increase the face value available upon death to the beneficiaries’ tax-free. Let me repeat, tax- free payout to the beneficiaries of the policyholder.
The last, and most baffling, excuse for surrendering that I hear is the policyholder who wants to surrender because they need the cash to pay for a parent’s funeral. The parent died with inadequate or no insurance coverage. So the current generation is giving up life insurance coverage to pay for the previous generation’s neglect to acquire adequate coverage, but is unwittingly passing on the same scenario to their children. Remember, life insurance is not for you. It’s for those you leave behind.
Buy and keep life insurance coverage for those you love, based upon your needs. We have a needs analysis calculator available on our website at www.hermannsonslife.org. Your local Hermann Sons Life agent will be glad to visit and provide a free needs analysis and insurance consult. Ask for our free Life Insurance Buyer’s Guide, available by calling 800-234-4124, or email us at marketing@hermannsonslife.org.
We’re here to help. Is your life insurance protection adequate?