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Why They Don't Buy

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In decades of meeting one on one with employees at every level to discuss their benefits needs, I often hear the same objections to buying life insurance.

Here are some of the most common misperceptions–and the real truth your customers should know:

–My employer pays for my life insurance so I don’t have to worry about it.

Employer-paid life insurance is almost always a group policy that only covers employees while they’re employed at that company. In fact, according to LIMRA, only 41% of adult Americans have individual life insurance. That means employees could be vulnerable if they lose their jobs or have a break in employment. Individual voluntary life insurance bought at work is a good solution for many people because it’s portable, so they can keep the coverage if they change jobs or retire.

–I already have enough life insurance.

The U.S. Justice Department calculated compensation needed to meet the needs of families of victims of the Sept. 11, 2001, terrorist attacks and recommended 12 times income for couples without children and 20 times income for households with children, according to LIMRA. The average family is underinsured by more than $300,000.

–I can’t afford life insurance.

There are many types of life insurance available to meet different needs and budgets. Term life plans are often available for a few dollars a pay period. Even a little life insurance is better than none at all. Plus, a voluntary plan bought at work offers the convenience of payroll deduction.

–I’m single so I don’t need life insurance.

Even if no one else is depending on a worker’s income, he or she is still likely to leave behind bills, credit card balances and final expenses such as funeral costs. These expenses could be an unnecessary burden on parents or siblings at a difficult time.

–My spouse has a good income, so even if I don’t have coverage, it wouldn’t have a major impact on my family.

Widows and widowers say it takes four to five years before their financial circumstances returned to what they were at the time of their spouse’s death. Between one and two years after the death, half the widows and a third of the widowers were just getting by financially.

–My spouse doesn’t work outside the home so we don’t need life insurance for him or her.

Spouses usually depend on each other for many things they might have to pay someone else to do: child care, laundry, cooking, shopping, cleaning, home maintenance, transportation, errands, etc. Adequate life insurance for a nonworking spouse can provide the income needed to protect a family’s way of life.

–There’s no need to buy life insurance for my children.

Children who die prematurely will still leave behind final expenses such as medical bills and funeral costs. In addition, buying and keeping coverage for children while they’re young protects their insurability if they should develop a health condition later in life that could make it expensive or impossible to get coverage.

–I’m healthy–I can worry about life insurance when I get older.

It’s usually more cost-effective to buy life insurance at a younger age, since the cost of buying it tends to increase as workers age. And buying a policy when young and healthy means workers will already have the coverage if they develop a health condition later that could make them uninsurable.