What you need to know about life insurance

Georgia's Office of Insurance and Safety Fire Commissioner,www.oci.ga.gov

Months into their marriage, Amanda and Johnathan Stricklin began the hard conversation about life insurance.

When should they purchase a policy? Which was the best for them? And exactly how much?

The Fayetteville couple’s conversations never got very much further than that. Then as they began recently contemplating starting a family, they realized they needed to get serious.

Stricklin is a 28-year-old manager of training at St. Vincent de Paul, a nonprofit that assists people in crisis. Her husband, Johnathan, 31, is a trade show manager. That might make it look like they have plenty of time, but they don't.

While no one likes to think about an early death, the couple is right to begin a search now, experts say. Anyone who has dependents who rely on their income for support and don’t have a big chunk of money in the bank probably should have some type of life insurance coverage.

Although Amanda Stricklin’s employer offers life insurance, not every company does. Either way, that’s a good place to start your search.

Not only do the Stricklins have each other to protect, but perhaps even more importantly, the baby they hope soon will enter the mix.

According to a recent survey by polling firm You Gov, 91 percent of Georgia residents would leave behind at least $20,000 in debt should they pass away, and over half — 54 percent — feel they would need life insurance to ensure their family maintained their quality of life after the person’s death. Still, 38 percent of Georgians don’t have life insurance, the survey said.

That hardly surprises Steve Manders, product review director with the Georgia Department of Insurance.

Most of us don’t think about life insurance until it’s too late, he said.

When and how people need it varies and depends on a person’s age and stage in life.

A single adult with no dependents, for instance, needs less coverage than a married couple like the Stricklins, and married couples with children have a greater need for coverage that can vary over different periods of time.

When is the best time to make such a purchase?

“These decisions vary … but generally, life insurance is the best buy when purchased early in life and when one is healthy,” Manders said.

But that rarely happens until people marry or begin to establish a family like the Stricklins.

Just as the right time varies, Manders said the amount needed for coverage can also vary over time. What’s for certain is, people should consider age, children, education, debt and the amount of income needed to pay it off.

The Department of Insurance recommends that consumers use a licensed agent when shopping for life insurance. Agents will be able to help determine what amount of life insurance is needed and then recommend an appropriate course of action.

The You Gov study was commissioned by Haven Life, a New York City-based online provider of term life insurance, in August prior to expanding its coverage to Georgia residents.

Haven Life’s CEO Yaron Ben-Zvi said that some but not all of the results were surprising and provided interesting insights into how many Americans are likely putting off getting the coverage they need.

One of the biggest misconceptions was associated with cost.

For example, he said, among the Georgia residents who didn’t have life insurance, 47 percent said they think it’s too expensive. A Haven term policy would cost a healthy 30-year-old about $24 a month to get $500,000 in coverage with a 20-year term length.

“That’s significantly less than our phone and cable bills,” Ben-Zvi said.

The problem, Manders said, is there is not an official website that compares life insurance rates, and sites do often require you to input personal information, opening the door for solicitations from agents.

The good news is Georgia residents have one of the lowest percentages of people — 38 percent — without life insurance. That compares to 46 percent of Pennsylvania residents and 45 percent of Michigan residents.

Still, according to the survey, 19 percent of Georgians compared to just 13 percent of Michigan residents would leave behind $100,000 or more in debt to their loved ones.

“Life insurance provides financial security for your loved ones in the event of your death,” Ben-Zvi said. “It’s not fun to think about, but if you have dependents or anyone who relies on you financially, you have to ask yourself if they’d be able to maintain their quality of life if you were suddenly no longer around.”

A life insurance policy helps ensure a family can cover their day-to-day expenses and pay off any debt a loved one might leave behind.

Term life insurance is a great option for most people because it’s one of the most affordable types and provides coverage during a set period of time.

Even if the time to purchase insurance may be a ways off, there are plenty of online resources where people can at least find out if they're missing out on necessary coverage, Manders said.

Although they have yet to settle on a policy, the Stricklins said they have reached consensus on what they believe will be an appropriate amount and have obtained a couple of online quotes.

“We just need to look a little bit deeper now,” she said.