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Updated: Jul 2, 2021

Insurance transfers the financial risk of life's events to an insurance company. A sound insurance strategy can help protect your family from the financial consequences of those events. A strategy can include personal insurance, liability insurance, and life insurance.

Life insurance has the potential to offer protection at a crucial time for those who matter the most to us. Life insurance needs are different at different times in life. During working years, life insurance may be able to help your loved ones avoid drastic changes in lifestyle in the event of your passing. During retirement, life insurance can be positioned to offer additional tax and estate benefits. Regardless of your life stage, consider reviewing your life insurance needs annually to account for changes in your family situation.

Let’s begin with a quick look at the facts of life insurance.

About 50 million households—roughly 40%—say they need more life insurance.

The numbers bear this out. In 2002, 15.0 million individual life insurance policies were issued. In 2017, only 10.5 million were issued. This drop in the number of policies may have many causes, but the result is fewer families with the protection of life insurance.

One reason may be that people vastly overestimate the cost of life insurance, believing, on average, that it costs three times as much as it actually does.

Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.