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The National Bureau of Economic Research (NEBR) this week made the proclamation that the US economy is officially in the midst of a recession or as the White House calls it, an 'economic downturn.' And according to the NEBR, the current downturn has been in place for over a year now. Heck, the media could have told us that months ago. Oh yeah ... they did. In fact, it seems that's all the media have been reporting on for several months now; that and the election. Some call the current conditions the result of a self-fulfilling prophecy brought on by fear caused by the media. Others believe we have the bursting of the housing bubble to blame, while still others lay the blame on the Bush administration. There is surely no shortage of fingers pointing every which way on this issue.

Regardless, there is little doubt these are tough economic times. And many Americans are feeling the pain. According to the most recent data released by the US Bureau of Labor Statistics, the number of unemployed Americans has increased by 2.8 million in the last twelve months and the unemployment rate has risen by 1.7 percentage points.

Yet despite these alarming numbers, we continue to see more people purchasing term life insurance. A recent survey of Americans by LIMRA International indicated only 21 percent of those in need of life insurance are considering delaying the purchase for economic reasons. A mere 5 percent of respondents plan to cancel or reduce their life insurance coverage. And perhaps the most interesting result to come out of the study is that 6 percent of respondents plan to purchase more life insurance coverage.

A deeper look at that last statement actually makes a lot of sense. What's important to remember about life insurance is one of its main purposes is to replace the income lost when the insured dies prematurely. In difficult economic times when unemployment is high and good jobs are hard to find, replacing that lost income becomes even more critical. For example, imagine you are the primary breadwinner in your family and you die unexpectedly and uninsured. Your spouse would be left to find a higher paying job to replace your lost income. That would be challenging enough in a strong economic environment, let alone the current one.

So while the case for keeping life insurance coverage in place is a strong one, we are not so naive that we can overlook the importance of basic human needs such as food, shelter, etc. Obviously those needs are first and foremost. If you are planning to delay your purchase of life insurance coverage or cancel existing coverage for economic reasons, you may want to consider simply reducing the coverage amount and/or term of your new or existing policy. You may be surprised at how inexpensive term life coverage can be in small amounts. And a small amount of life insurance coverage is better than none at all.



Credits: www.bls.gov, LIMRA International