Getting the Right Life Insurance Balance

(NewsUSA) - Would you be able to cover more than a few months of living expenses if your family's primary earner died?

If you answered "No," there's at least some consolation in knowing that two-thirds of U.S. households are in the same boat, according to research from the association LIMRA. So, for anyone concerned about society's future well-being, the question is this: If so many Americans apparently realize that life insurance is one of the best ways to protect against potential impoverishment -- half of U.S. households say they "need more" of it -- why, then, is ownership of such policies at a 50-year low?

And by "low," we mean that three out of 10 households completely lack life insurance.

With a hat tip to September being "Life Insurance Awareness Month," experts cite three main reasons for the drop-off:

* Economic turmoil. Let's face it, the past decade has been rough for most people. Wages have stagnated when adjusted for inflation. Home mortgages remain underwater. The Big Corollary (Non)Surprise As Americans Tightened Their Belts: Since 2007, the volume of new individual life insurance sales has fallen annually by five percent -- and more people have let their policies expire.

* Misperceptions about the "prohibitive" cost. Neil Sprackling, president of U.S. life and health at Swiss Re (www.swissre.com), a leading wholesale provider of reinsurance celebrating its 150th anniversary, is among those who say people would be surprised to learn that a policy can actually cost as little as one latte per week. "Balance that," he says, "against the reality that life insurance is essential to a family's long-term health. An inadequate policy could spell big trouble, and the wrong policy could render a household unable to maintain their standard of living upon the death of an income-generating family member."

* Too many and too complex options. "Overwhelmed" is probably a fair way to describe consumers' typical reaction to all the different policies out there. So, it's heartening to know that the industry has made big strides in terms of being more user-friendly. Not only can consumers now research and apply for policies online, but many insurance websites offer calculators to determine how much protection a family will need. Another positive: Many financial advisors now partner with life insurance specialists who can walk a customer through the application process quickly.

The bottom line? It's never been easier to find the plan that works for you, and it may be cheaper to acquire that protection than you think.