Most consumers are aware that life insurance coverage is important; however, many don’t take the necessary steps to compare insurance quotes from potential providers.
Even those with coverage from employers may want to look elsewhere, according to a new report that sought to compare life insurance coverage for families.
Employer-provided life insurance coverage is rarely enough to support families, as many only provide death benefits of $10,000 to $25,000, USA Today reports. This may be enough to cover funeral expenses, but could fall well short of helping a family maintain its standard of living.
“People don’t think about, ‘What will my family do if I am gone and not earning a living?’ ” Peter Katt, a fee-only life insurance adviser, told USA Today. “The whole point of this kind of planning is to provide the family with maximum flexibility so they’re not stuck.”
While some companies allow workers to purchase group insurance through payroll deductions, many could actually save money by taking out their own policy, the news source says. Those who are young and healthy could benefit, as they are likely to pose less risk to insurers than those with medical problems.
Another added problem is that many companies will not allow consumers to continue this service after they leave their job. This is a particularly glaring issue given the current high levels of unemployment and a weak economic environment.
Additionally, consumers can look to money-saving options, the news source says. Families may not need to compare life insurance quotes for coverage on both parents. For example, a husband or wife who works may wish to have a more comprehensive policy than a stay-at-home spouse. Parents could also consider skipping policies for newborn children, USA Today says.
In this economic climate many may also be holding out due to apprehensions about whether an insurer could actually fail. However, when a company defaults on insurance the cash value of the policy is frozen or extended over a period of time. In addition, those with term life insurance are covered by state guaranties, which could provide as much as $300,000 in death benefits, and up to $100,000 in the insurance’s cash value.
For now, families looking to provide extra protection for their children’s future may wish to compare insurance rates in order to save money. While it may seem like an added expense, insuring their safety now can lead to fewer problems later.
About the Author:
Pete Miller is a financial journalist who focuses on relevant personal finance topics on e-wisdom.com, including bank accounts , credit cards insurance rates and mortgage loans.
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