What the 9/11 Commission Had to Say about Life Insurance Coverage

A topic no one wants to consider. Our own death. When the unexpected happens, how will your family survive if your income is no longer coming in? How will they pay the mortgage, funeral expenses, debts, medical bills or childcare costs? Would your life insurance cover these things? Sadly, there are many heartbreaking stories about families under financial stress who wind up losing their home and more due to inadequate coverage.

Are you sufficiently covered?

Sadly, LIMRA’s Life Insurance Needs Model estimates that 48% percent of households (60 million) need more life insurance – with an average coverage gap of $200,000.¹

• Among households with children under 18, 4 in 10 say they would be in immediate financial trouble if a primary wage earner died today.¹
• Another 3 in 10 would have trouble keeping up with basic living expenses after several months.¹
• Overall, 7 in 10 of all households said they would have trouble covering everyday living expenses after several months if the primary wage earner died.¹

How much life insurance do I need?

According to LIMRA (Life Insurance Marketing & Research Association), the basic rule of thumb for estimating how much life insurance you need is to multiply your annual salary by 7 if you have few dependents and debt or by 10 if you have a large family and high debt. This is often referred to as the 7-10 rule.

But is that enough?

After the September 11, 2001 attacks, the Victim Compensation Fund used a different formula when calculating compensation for the victims’ families. The Compensation Fund was a $7 billion dollar fund created by Congress. It was designed to provide a no-fault alternative for people to receive compensation instead of filing a civil lawsuit against the airlines or other liable parties.

Part of the formula the Fund used to calculate a payment was to determine the victims’ future earning potential. Instead of using the 7-10 rule, it valued the deceased future earnings potential at 16 times their income.

Also notable was that more than half of the 9/11 victims did not have life insurance. If not for the 9/11 fund, many families may have been at great financial risk.

Educate, Educate, Educate!

Life insurance can be a topic that employees are unsure about. They don’t know how much they need. They might find buying insurance confusing or intimidating and often don’t understand how affordable it can be. If they are young, single or unmarried, they may not consider purchasing insurance because they don’t consider it a priority. Schools, cities and counties must take on the role of educator to help their employees understand its need and value.

Here are some ways to provide education and guidance to your employees about the importance life insurance:

• Make sure to provide educational materials to your employees about your benefit offerings. It will help boost enrollment, provide a greater appreciation for the benefits package, increase loyalty and add value to their financial planning.
• When your employees have a life event (marriage, new baby, divorce, etc.) remind them about reassessing their life insurance needs. Do they have enough? Too little? This is also a good time to remind employees about updating their life insurance beneficiaries.
• Ask your broker/agent if they have any materials you can share with your employees about life insurance.
• Hold educational benefit meetings to answer employee’s questions.

Here are some additional shareable resources:

Life Insurance Guide – Is life insurance is right for you? How much do you need? Learn about how different life events can affect your insurance needs.

Life Insurance Needs Calculator – How much coverage will you need?

Life Insurance Resources –Watch videos, download flyers and read about real life stories about how having life insurance made a difference.

By providing your employees with information on this topic, you are helping them protect their loved ones if the unexpected happens.

¹www.limra.com/uploadedFiles/limra.com/LIMRA_Root/Posts/PR/_Media/PDFs/Facts-of-Life-2016.pdf