2/8/2010 4:40:00 PM Insuring Long-Term Stability In an economic downturn, life insurance gains interest as an investment
In Pursuit of Financial Protection
An Ipsos poll sponsored by New York Life Insurance Co. found that 83 percent of U.S. families are more interested in providing financial protection for their families. Here’s a look at which vehicles they would use to accomplish that goal.
Life insurance – 32 percent Taking a second job – 22 percent Drawing from retirement savings – 22 percent Help from family or friends – 7 percent Hope to win the lottery – 1 percent None of the above – 16 percent
In today’s economy, it seems more people nationwide are looking at using life insurance as a means to financial stability, but increased interest in the Ozarks isn’t leading to more sales across the board. A Kelton Research survey for the nonprofit Life and Health Insurance Foundation for Education found that 56 percent of Americans believe the economic downturn made it more important to carry life insurance coverage. And a New York Life Insurance Co. survey found that 32 percent of U.S. adults age 30 and older would rely on life insurance to provide financial protection for their families. Steve Schneider, registered representative with New York Life in Springfield, said his life insurance sales were up in 2009, partly because clients sought to shore up their financial footings. “For those individuals that are heavily into the market and basically lost half of their wealth through the turmoils we’ve had, one way to replace it is with life insurance,” he said, declining to quantify his sales growth. “They’re having to live on half of what they had and still want to leave some sort of legacy to their families or protection.” Don C. Angell, senior partner with New York Life in Springfield, said his life insurance sales also were up in 2009, and he too credited market conditions for the uptick. “With the market being so volatile, (clients) are seeing that life insurance isn’t so volatile,” he said.
Explore coverage options Permanent life insurance – such as whole life – offers a number of advantages, including tax-deferred cash-value growth and disbursements, Angell said. Jim Enyart, a personal risk adviser at Ollis and Co., said permanent coverage could be attractive to those who want secure investments. “When the economy is bad, there is safety in a permanent type of insurance because it’s a guarantee – their money is going to be gaining,” he said. But beyond using life insurance as a means to leave a legacy to future generations, another attraction to permanent life coverage is that it can be borrowed against if the insured party hits a rough patch. And although repayment of those loans is an option, it’s not required. “If they can’t pay it back, they don’t have to. The loan would just be (satisfied) at their death,” Enyart said. Trevor Croley, director of development at Springfield-based Croley Insurance and Financial, said he hasn’t seen much of an increase in the number of policies his company is writing, but he does note that more people are at least asking about life insurance, with most of the interest in term life insurance. Term life coverage typically carries a lower premium for a guaranteed benefit, but the policies don’t build cash value over time. Term life policies can’t be borrowed against, but they can provide a nest egg for heirs when the insured party dies. “When the economy shuffles like this and people are looking for places to save money, I think it’s a natural inclination to shop it and see what else can be done,” Croley said.
Realistic expectations Brittany Helton, personal risk adviser at Ollis and Co., said people who are looking into life insurance need to be realistic about their future needs. “Most families do live on two incomes, and if one of those incomes is lost, it would really change the way the household has to live,” Helton said. “We rarely see people overinsured. More often than not, they’re underinsured.” Helton offered the example of a stay-at-home mom who takes care of children and the house and many other tasks that are of tremendous value to the family, but not factored into a family’s annual income. “Without (her), that would be a huge extra cost with child care,” Helton said. But Enyart noted that part of the challenge with life insurance is that people don’t like to think about someone dying in order to access the money. “Sometimes, we have to disturb them to get them to see that point. … It’s not something people want to think about,” he said.
