Life Insurance Facts

LIMRA International released a slew of intriguing life insurance facts relating to Americans and their life insurance, or lack thereof. Here is a list of life insurance facts and the many benefits of having life insurance: income replacement for years of lost salary, paying off your home mortgage, paying off other debts, such as car loans, credit cards, and student loans, providing funds for your kids' college education, helping with other obligations, such as care for aging parents.

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Tim is a licensed life insurance agent with 23 years of experience helping people protect their families and businesses with term life insurance. He writes and creates stuff for QuickQuote and other insurance and financial websites.

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UPDATED: Oct 28, 2020

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In the spirit of Life Insurance Awareness Month (September 2006), LIMRA International has released a slew of intriguing facts relating to Americans and their life insurance (or lack thereof). All facts are from LIMRA International’s life insurance consumer studies. A couple of facts that stood out as concerning are:

  • 68% of American adults have some form of life insurance coverage.
  • Of those that have coverage, nearly 33% have only group coverage offered through an employer.

The first fact is alarming for obvious reasons. There are still too many uninsured adults in this country. The second fact may not appear to be cause for concern. However, it is. The reason is that group coverage is not guaranteed.

Let’s assume you are covered through your employer under a group term life insurance plan for 10x your annual salary, for which you contribute a portion of the premiums each month. The following are potential scenarios that could leave you uninsured:

  • The premium rates increase beyond your means.
  • Your employer simply eliminates the plan.
  • You lose your job.

It is true that in the case of points two and three, you may be able to continue your life insurance benefits through a process known as Conversion. Conversion typically allows a covered individual to take the life insurance benefit with them upon termination of the plan or their job if they qualify. However, the premiums upon Conversion are ‘converted’ from a group basis to an individual basis. And remember, you most likely did not have to qualify medically for the group plan at initial enrollment. So you can expect a hefty increase in the premium upon Conversion. Enough so that many people choose not to convert and end up uninsured.

Here is also a list of the many benefits of having life insurance: income replacement for years of lost salary, paying off your home mortgage, paying off other debts, such as car loans, credit cards, and student loans,
providing funds for your kids’ college education, helping with other obligations, such as care for aging parents.

I’ll have more life insurance facts for you later this week along with recommendations for avoiding the pitfalls these facts reveal.

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