COLUMBUS — Governor Kasich and Lt. Governor and Insurance Director Mary Taylor are reminding Ohioans about the importance of taking steps to financially protect their loved ones if an unfortunate life event were to occur. They have designated September Life Insurance Month in Ohio through a resolution.
“Life insurance is intended to help protect our families and those we love,” Taylor said. “Each family should carefully consider the type and amount of life insurance they need based on their unique circumstances.”
In the event of a tragedy, life insurance proceeds can replace a deceased person’s income, pay the mortgage and other loans, and help pay college tuition. Life insurance serves as a monetary support system – typically for those designated as beneficiaries – and should be a central piece of a family’s financial planning. Many employers provide life insurance and it can also be purchased through an insurance agent.
According to the 2013 Insurance Barometer Study conducted by the LIFE Foundation and LIMRA, a majority of consumers (85 percent) agree that most people need life insurance and 65 percent say they personally need it. However, just 62 percent of consumers indicate they have life insurance coverage today.
There are three basic types of life insurance: term life, whole life and universal life. Term life is generally less expensive than other life insurance products and covers a certain time period or to a specific age. Whole life is lifetime coverage that does not increase with your age. Universal life generally has a premium amount and death benefit that are flexible, meaning they can be changed after your purchase.
Important life-insurance life-stage considerations:
Young Singles: While buying a policy early in your life will provide lower costs and potentially guarantee your insurability, some believe the need for life insurance at a young age typically without dependents may not be necessary. You should consider your options and make a choice based on your finances, health and other circumstances.
Young Families: Having children is often the catalyst for buying life insurance. When securing coverage, consider covering both spouses – even if one stays at home and is not employed. In the event of the stay-at-home parent’s death, the surviving spouse will need to shoulder all the responsibilities of the household.
Established Families: Remember to periodically review and update your coverage to reflect changes in your financial situation and family composition. One strategy to keep costs down for a growing family may be to take a look at term life insurance, which offers financial protection for a specified time period.
Seniors: Now is a good time to re-evaluate your life insurance to determine whether you still need as much coverage when you had a younger family and larger mortgage principle. If you are covered through your job and are planning to retire soon, inquire about converting it to an individual policy.
Single Parents: If you and your ex-spouse have life insurance policies, adjust the beneficiaries to reflect the changes you both want after the divorce is final. Review your policy, will and retirement accounts to make sure they all indicate the correct beneficiaries. If your spouse will be paying for child support, consider requiring that he/she purchase a policy covering the term of the payment and be named as the policy owner and beneficiary.
Military: Check your policy renewal date and payment terms with your agent to ensure your coverage will remain in effect during deployment. If necessary, you may be able to renew a policy early or have your premiums paid by automated bank draft. Some insurance companies might also allow you to suspend certain coverage while you are deployed.
Raising Grandchildren: It is generally not a good idea to leave a life insurance benefit directly to a minor child. Make sure the policy names a contingent beneficiary or a trustee who will act as a beneficiary on behalf of the child. Otherwise the life insurance benefit may not be accessible to the child until the issue is processed through court. You may want to set up a family trust with your selected trustee in charge.
Ohioans with questions about life insurance can call the Department’s consumer hotline at 1-800-686-1526. A life insurance consumer guide and a listing of licensed agents are also available at www.insurance.ohio.gov. You can follow the Ohio Department of Insurance on twitter @OHInsurance and on Facebook at www.facebook.com/OhioDepartmentofInsurance.