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Many parents reluctant to talk about life insurancePosted On Wed, September 4, 2013
While parents today are often sure to review life insurance rates so that they get the best possible deal for their dollar, this type of coverage is one of the last things they want to discuss with their children, according to a recent poll.
When it comes to uncomfortable or awkward conversations, parents would rather opt to talk about alcohol, religion, politics or even the "birds and the bees" before they discuss life insurance, a new survey commissioned by State Farm revealed. When asked why this was the case, respondents stated that it was mainly because they felt ill-at-ease when talking about it.
Joe Monk, senior vice president and chief administrator officer for the life insurance division of State Farm, noted that despite this, parents understand that life insurance is an important issue for their kids to be aware of. And this awareness has become that much more critical due to the economy.
"The challenging financial times experienced by families over the last several years only underscore the importance of planning for the long term and talking with those we love about family finances, including life insurance," said Monk.
Life insurance comprehension often limited
He added that another reason why it's crucial for a family to talk about life insurance is that someone may not fully understand how coverage works, as one or several people could be under the impression that the only time they will need to know about it is if something were to happen to the policyholder's health.
"Some policies, such as permanent policies, also offer living benefits," said Monk. "These policies build a cash value that can be used over time for other life goals, such as paying for college or providing a little extra cushion during retirement."
September is Life Insurance Awareness Month, and in addition to State Farm, Allstate indicated that policyholders should take some time out this month to update their plans with an insurance checkup.
Don Civgin, president and CEO of Allstate Financial, noted that one of the reasons why life insurance is not broached more often is that some find it to be intimidating. However, if more people were aware of what the coverage provides for, it would likely be addressed more.
In addition to providing coverage for funeral and burial expenses, death benefits can also help families pay for a mortgage, college tuition payments and unpaid medical bills, as well as serving as a source of retirement income.
There are typically two types of life insurance coverage: term and permanent. Term life is just as the name suggests, it's for a specified period of time. So long as the owner pays their premiums, the insurer guarantees to provide coverage for however long the term is. Once the term date expires, policyholders can either renew or cancel their policy, depending on the situation they're in.
Permanent tends to be more costly, but at the same time, the benefit offerings are usually greater than term. Permanent coverage gives the policyholder financial protection over their entire life. The longer someone lives, the more cash value it has.
"When purchasing a life insurance policy, consumers need to make sure they have enough coverage to replace the income and employer-provided benefits of the family's primary breadwinner, as well as cover any death-related expenses," said Jeanne Salvatore, senior vice president and national spokesperson for the Insurance Information Institute. "When it comes to how to go about actually buying the policy, a good place to start is with the insurance professional from whom you may already have bought auto or homeowners insurance."
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