By Ronald Herrmann
What’s in a name? Sometimes misunderstanding and confusion. Take life insurance. Over my nearly 30 years in the insurance industry there’s been a marked change in how people view life insurance. The post-World War II and Baby Boomer generations considered it solely as a benefit to be paid out after death, especially of a breadwinner, and, as such, a necessity.
Today, however, fewer than half of the U.S. population has life insurance*. Further, according to new research from the Life Insurance and Market Research Association (LIMRA), some 41 percent of Millennials believe they don’t qualify for life insurance coverage. These perceptions, often inaccurate, keep many of them from buying it, says James Scanlon, Senior Research Director at LIMRA.
Life insurance has other negative – and false -- connotations. Some people think it’s too complicated, restrictive, burdensome, only for wealthy people, the list goes on. That’s why it’s time for a new conversation about life insurance, beginning with this key message: Some life insurance can be just that – a benefit to use for life.
Permanent life insurance coverage with living benefits can be a smart step toward long-term financial security as part of an overall strategy because of the growth and earnings potential of its cash value – words many people do not associate with life insurance.
The primary purpose of life insurance is to provide a death benefit to the policyholders’ beneficiaries. However, permanent life insurance can be a valuable part of a larger financial plan, providing protection and more.
Live More: It can protect your family’s current standard of living against one of life’s unknowns with a guaranteed benefit when it’s needed most. Plus, you have the flexibility to tailor the policy with a wide range of options (like adding a long-term care option for an additional cost) to fit specific needs that may arise along the way.
Keep More: A permanent life insurance policy’s cash value grows tax-deferred, and the death benefit is generally income-tax-free, so there are no income taxes on the money you pass along.
Build More: Some types of permanent life insurance can build cash value over time, tax-deferred, and let you access the policy’s cash surrender value tax-free through loans and withdrawals if you need it, for important financial goals or to help maintain your quality of life in retirement.
Generally speaking, the nation’s population as a whole may be under insured, and many are not saving adequately, even considering today’s changing economic realities. With its multiple tiers of financial advantages, life insurance should be an important consideration. It can provide protection and more to help you adapt to life’s changes.
Ronald Herrmann is Head of the US Life business for AXA.
Loans and withdrawals from a permanent life insurance policy reduce the policy’s cash value and death benefit and increase the chance that the policy may lapse. All guarantees are based on the claims-paying ability of the issuing life insurance company.
“AXA” (referred to here also as “AXA U.S.”) is the brand name of AXA Equitable Financial Services, LLC and its family of companies, including AXA Equitable Life Insurance Company (NY, NY), MONY Life Insurance Company of America (AZ stock company not licensed to conduct business in NY or PR), administrative office: Jersey City, NJ), AXA Advisors, LLC (member FINRA, SIPC), and AXA Distributors, LLC (member SIPC).
*LIMRA 2016 Insurance Barometer Study