Most Young Workers Overlook Life Insurance Until Too Late
Having quality life insurance coverage is one form of risk management that many people overlook until it is to late, especially the working poor and adults who are still relatively young. Sadly, it is the families of the working poor who are often the most at risk of slipping into poverty when tragedy takes a bread winner in an untimely manner, and it is when an adult is young and healthy that it is easiest to acquire high quality life insurance coverage without exorbitant premiums. Although some form of life insurance is actually quite affordable for the greater majority of the population, an estimated 47 percent of the population has absolutely no life insurance coverage, according to a study performed by the SBLI USA Mutual Life Insurance Company, and many of those who do have coverage are paying high premiums due to waiting until they had health problems or a dependent family to obtain coverage.
Many young people and underemployed individuals overlook the value of obtaining life insurance coverage as early as possible in their life. However, even if they have no dependents, an unexpected death can cause a financial burden on existing family members through unpaid debts and funeral arrangements. Ideally, a young person or individual on a fixed income will lock into a fixed rate whole life insurance policy. There are a handful of benefits to such coverage, the primary of which being that your rate will remain fixed for the length of your life insurance contract, regardless of any changes in health that you might encounter as you age. Throughout this period, the amount that your beneficiaries would receive in the event of your passing remains fixed. That fixed rate is based on your health and risk factors at the moment that you begin your insurance plan, so it is worth locking in while you are young and are relatively low risk. However, it is hard to think ahead so far for most people in their younger and healthier years, especially for those who are basically surviving paycheck to paycheck. An estimated 80 to 90 percent of young individuals have absolutely no coverage, much less a fixed rate plan such as described here.
For those who can be convinced of the benefits of obtaining such individual coverage while they are low risk, they are arguably best off by signing up for life insurance coverage in the form of variable universal life insurance.You can shop these plans with your auto insurance agents nowadays, and your health insurance agent. Life insurance comes in a mind boggling array of options, but plans such as variable universal life always come with some plan so that the amount that you pay into your plan builds up an investment account that is in your name in the addition to your coverage. Over the course of your life insurance contract, a portion of the money that you are paying earns interest for you. If you have a fixed rate plan as described above and reach the end of your contract, you have the option of taking that money out including the interest that has been accrued over the past, say, 30 years, or you can sign up for a new fixed rate insurance plan based on the risk factors that you present at the time. The amount of interest is relatively low, but it typically beats inflation at four to five percent, and many individuals who are low income when they sign up for their original plan find that they are doing much better by the end of the basic life insurance plan and have acquired other forms of life insurance coverage. In such a situation, they might choose to take the lump sum out at the end of their contract and simply transfer it into other investments as part of their overall retirement plan.