|By Susan Salisbury, The Palm Beach Post, Fla.|
|McClatchy-Tribune Information Services|
It doesn't help that dealing with it can be confusing and a little daunting.
Whatever the reason, less than half of U.S. households have individual life insurance, according to LIMRA, a research and consulting firm. Among those households with life insurance, the average has enough to replace 3.5 years of income.
Purchasing it isn't much fun. It's something people buy for when they die to give their loved ones a way to pay bills, final expenses, replace a wage earner's income or cover estate taxes.
"Life insurance is a bet that you will die. You want to lose that bet," said
Whether you need it can depend on your stage of life.
"You need a lot when you have babies. As the babies get older and are out on their own, you don't need any," Hunter said.
Once people retire. their spouse will usually inherit their retirement income if they die.
Deciphering insurance terms and policies can be so complex, even experts turn to computer programs to figure out whether a policy makes sense, Hunter said.
Most people should buy term insurance, which provides coverage for one to 30 years as long as the premiums are paid, Hunter said. Permanent life insurance, also called cash-value insurance, is a lot more complex and comes in four types. They are whole life, universal life, variable life and variable universal.
"Term is simple. Either you die within the term, or you don't," Hunter said.
Mostly importantly, go online once in a while and check rates at term4sale.com, Hunter advises.
"First of all, you should probably only have term. Every couple of years go on term4sale and see if a new policy will beat your current one. Due to competition, prices are going down," Hunter said.
Term4sale does not sell life insurance. It's a software company that collects information. You fill out a form on its website, then are advised to print the information to compare the quotes from various companies.
No matter what type of life insurance policy you purchase, it should be monitored, said Newman, whose company My Life Audit, specializes in reviewing policies.
More than 65 percent of life insurance policies are either underperforming, are at risk of lapsing, or could be replaced at a lower cost with the same or better benefits, Newman said.
A policy could lapse because it ends when the insured reaches a certain age. Even in the case of term insurance, it's possible to cancel it and find a better rate.
It's also important, Newman said, to see if any changes are needed, such as updating the beneficiaries.
The insured could have improved health that enables him or her to qualify for a lower rate. For example, a man who was a smoker when he took out the policy, can get a better rate after he stops smoking.
"We are also finding that life insurance today is much less expensive than it was 10, 15 or 20 yeas ago. People are living longer. The longer people live, the cheaper it is, because the longer you will pay that premium," Newman said.