Households That Earn Less May Not Understand Life Insurance

9/4/2010

People on the lower end of the income spectrum may not have as sound an idea about the purpose for life insurance, nor are they aware of hot to go about getting it.

According to a recent survey from a major insurance and wealth management company, 29 percent of households with an income of less than $50,000 said they understood life insurance. Education also played a role, as people with only a high school education were the least likely to sign up for this kind of policy.

For those who don't understand how life insurance works, the Insurance Information Institute has put forward some guidelines. For example, consumers may be faced with choosing between a term or permanent policy.

Term policies last for a particular period of time. The III said that they may be best suited to take care of specific expenses when a person dies, such as their child's education or a mortgage.

Meanwhile, permanent life insurance lasts for the entire length of a covered person's life. Along with providing a death benefit, people may be able to borrow against their policies when they need some extra cash.

ShareThis