In This Issue

8 reasons to review your life insurance

July 18, 2012

Six flammable foodsBy: Nancy Daniel

Did you know that a whopping 35 million households in the U.S. have no life insurance whatsoever—and millions of others don’t have enough to cover day-to-day costs if a breadwinner were to pass?*

Don’t let this be the case for you and your family. If you don’t have a policy in place to protect you and your loved ones in the event of the worst, a trusted ERIE Agent can give you information and a quote on any Erie Family Life product.**

Already have a life policy? Then be sure to give it a regular review so you don’t end up in a situation like ERIE Agent Mic Starr of Michael A. Starr Insurance in Chambersburg, Pa., did. “We didn’t realize my brother named his former live-in girlfriend as the beneficiary of his life policy,” said Starr. When his brother lost his life in a car accident, that settlement ended up going to the ex, burdening the family with funeral, burial and other final expenses. “It’s vitally important to review your policy and notify your Agent of any life changes,” says Starr.

To help you determine which circumstances should prompt a review, consider the following list. (And if you don’t have a policy, here are some compelling reasons to get one!)

When wedding bells ring

Anyone getting married should also say “I do” to life insurance. Without a policy in place, there’s no guarantee that your spouse and any children would be provided for in the event of the unthinkable.

When you buy a home

Just purchased your dream home? Congratulations! In addition to taking out a homeowners policy, you’ll also want to take out a term life insurance policy. It may cost less than a whole life policy—and can cover the cost of your mortgage until it’s completely paid off.

When you have a baby

Becoming a parent changes everything—including insurance requirements. According to the Insurance Information Institute, one-third of all families with a new baby haven’t updated their life insurance protection. If you already have a policy, take the time to update your beneficiary designations.

Even with adult children, insurance might still be essential. “One customer kept a policy active on his 30-year-old daughter, who hadn’t acquired much financially,” says Starr. “When she died, that policy made a horrible situation a little less so by covering her final expenses.”

When one spouse decides to stay home

The thing to remember here is that stay-at-home spouses continue to make a financial contribution to the family. Should that spouse pass away prematurely, the surviving spouse would have to cover expenses for child care, cleaning, cooking and other forms of home maintenance—and those can add up fast being that the annual cost of day care for a preschool-aged child ranges anywhere from $3,900 to $14,050.i

When a child enters college

With the cost of higher education increasing ever higher, many parents end up co-signing on their kids’ education loans. It’s great that you want to help, but know that you’ll be liable for the loan should tragedy strike. A life insurance policy on both the student and the parent will ensure school loans are one less worry.

When you open a business

Many lenders require life insurance on small business loans. It’s with good reason since a separate policy protecting the business can help ensure that the business debts and operating expenses are handled. It can also give you peace of mind knowing that the policy you have for your family remains available for them when they need it.

When retirement is imminent

Leaving the workplace may mean leaving some life insurance benefits behind, so make sure you do a thorough review before the final quitting time.

When a divorce happens

Even though you’re no longer married, you may still have people who depend on you financially. Review your policy’s beneficiaries and what coverage is in place to protect any children you and your former spouse had together.

Life insurance 101

Here’s some information to get you started—for further demystification, don’t hesitate to contact your ERIE Agent or the ERIE Life Insurance Calculator.

Term insurance is a popular, affordable form of coverage that lasts for a specific number of years. Unlike permanent life insurance, it doesn’t have a cash value associated with it. Term life is ideal if you want a high level of protection at a value price for a set period of time.

Permanent (or whole life) life insurance accrues cash value and can remain in place for your entire life. The premium amount remains the same every month regardless of any health changes, and the cash value on your policy is guaranteed. Because it provides these extra benefits and security, permanent life premiums are generally higher than term life premiums.

Universal life insurance combines features from both term and permanent insurance. It has a cash value benefit—but unlike whole life insurance, it offers a flexible premium feature that lets you increase or decrease payments to accommodate changing life situations. It allows you to guarantee the coverage and the payment period.

* Based on a 2011 Life Insurance Ownership Study published by LIMRA, a worldwide association of insurance and financial services companies.
** Life insurance products not available in N.Y. Not all companies are licensed or operate in all states. Not all products are offered in all states. Go to erieinsurance.com for company licensure and territory information.

ihttp://www.naccrra.org/sites/default/files/default_site_pages/2011/cost_report_press_release_2011_0.pdf

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