History of Life Insurance

Each year, May 2^nd is celebrated as National Life Insurance Day, marking the anniversary of the first life insurance policy being written in the U.S. in the late 1760s. While you may not have had this day marked on your calendar, it does serve as a good reminder that it might be time for a life insurance check-up.

Despite having a national holiday dedicated to it, less than 60 percent of Americans have a life insurance policy in place, and 1 in 5 of those people admit that they don’t have enough. Whether you are underinsured or part of the 40% who have no insurance at all, one thing is certain – 100% of us need life insurance protection. So what’s stopping you from getting this vital coverage?

For some, it’s simply not knowing enough about the product to make an informed decision about purchasing it. For instance, the first question most people ask is “how much life insurance do I actually need?” Dave Ramsey recommends that you choose a face amount – the amount of benefit that would go to your family if you pass away – that is 10-12 times your annual income. This ensures your family has enough financial support to help them move forward, cover any bills and debts, and prepare for their future.

Another common misunderstanding about life insurance policies is the difference between term life insurance versus whole (also known as permanent or cash value) life insurance. The most affordable type of life insurance plan (and the only type that Dave recommends) is term life. Term life insurance provides you with coverage for a specific amount of time, usually between 10 and 30 years. This option is more affordable because it is not worth anything unless you were to die during the course of the term, at which point your beneficiary would receive the tax-free proceeds of your policy. Once the term period is over, you are no longer covered by life insurance unless you purchase a new term policy.

Whole life insurance – as the name implies – lasts for your whole life. The premiums on these policies tend to be significantly more expensive than those of term life insurance because you are accumulating a cash value in addition to your death benefit, which is similar to an investment-type product. Often, these premiums can be 6-20 times more expensive than their term life counterparts, and the rate of return on the investments is not good. Because of the high cost of whole life insurance, obtaining 10-12 times your income is typically not an affordable option, so many people buy lower-value policies than what they need and therefore cannot provide their families with the level of protection that they deserve.

As a society, we are strained by debt and struggling to balance our finances and responsibilities. It is possible, however, to establish an emergency fund, get out of debt, and seek out high-quality investment opportunities to build wealth while making sure your family is taken care of. Term life insurance helps make these goals attainable with protection that is low in cost and high in value.

One of the greatest gifts you can give your loved ones is security for the future. Don’t be a part of the 50 million American families who are either uninsured or underinsured. You are not in this alone – at Zander Insurance, it’s our mission to protect families – and we’re here to help you do just that. Give us a call at 1-800-356-4282 to talk through your options or visit the link below to get your free, instant quote.