By Emily Miller
Due to industry trends and a shift in the demographics among potential customers, the majority of life insurance companies have been moving towards living benefits over death benefits.
The notable demographic shifts that are accountable for this industry change are a slow-growing and older workforce, meaning the pool of younger workers entering the labor market is shrinking. For those just entering the workforce, there will be a larger representation of women and minorities than in previous years. Immigrants will also represent the largest percentage increase in the workforce since World War I.
All of these changes are bound to affect how life insurance will be sold and marketed in the future. Insurance companies have to find new and inventive ways to market their products to the general public.
Another factor is the ratio of workers paying into the Social Security system as this number is expected to decline, putting a strain on the public system and requiring more reliance on private sector products for retirement.
As result of this trend, businesses have been selling more annuities and other retirement and savings-oriented products than life insurance, as most life insurance policies carry a death benefit that only pays out when you die.
The difference between a death benefit and a living benefit is that the policyholder can use their life insurance benefits while they are still alive. Unlike a term life insurance policy, a permanent life insurance policy builds a cash value that can grow into a size-able asset that you can access by loans and withdrawals.
With these living benefits, you could help pay for your children’s education, add to your retirement income or pay for an emergency expense that may arise. They could also be used to help cover the costs associated with a chronic, critical or terminal illness. Living benefits may also be known as Accelerated Death Benefit Riders.
Along with living benefits, another result of the aging population is the increased interest in long-term care products that may be still confusing for the general public. In summary, it is important coverage that provides valuable support and financial resources that help cover the cost of long-term care you might need in the event of an illness, accident or through the normal effects of aging.
Want to learn more about life insurance? Read our article The Most Frequently Asked Life Insurance Questions.