Life Insurance: A Family Conversation on Financial Security

You care enough about your family to protect their financial security with life insurance.

But, as crucial as that coverage is, it’s equally important to make sure your loved ones know what your insurance does for your family and how it works — well in advance of the day it matters most. Everyone should grasp the purpose, function and (most importantly) benefits of their protection.

So, how does a family discuss an issue as fundamentally uncomfortable as life insurance benefits? Here are some suggestions to make that conversation more productive and less distressing.

One of your first objectives should be to get everyone talking positively.

Happiness, ambition and hope are great subjects to frame family continuity. One of the easiest ways to do that is to talk about life goals:

• What kinds of careers or important pursuits do your loved ones envision?
• What educational, professional or personal achievements matter most?
• What positive steps can be taken to anticipate and overcome likely obstacles?

By starting the conversation off on a positive note, you establish a “can-do” spirit that keeps everyone focused on life over the horizon.

Once you’ve established that the future is bright and that it’s well worth protecting, discuss the practical benefits of your insurance coverage.

Life insurance isn’t just about money in general; it’s about safeguarding your family’s dreams and ambitions by removing common, avoidable barriers to success. Benefits that provide that protection often include:

• Mortgage protection. If you have a mortgage on your home, life insurance can ensure that your family isn't burdened with large mortgage payments or even worse, a forced sale of the family home.
• Student loan protection. If you've cosigned for your child's student loans, your life insurance policy could protect them from being solely responsible for repayment in case of your untimely demise.
• Funeral cost coverage. Funeral costs can be significant. A life insurance policy can ensure that these expenses are covered, reducing financial stress during a very difficult time.

By associating benefits with common goals, it becomes easier to focus on the practical, nuts-and-bolts aspects of your coverage than on the dispiriting reason it’s needed in the first place.

There are simple, practical aspects to insurance coverage that everyone in the family should know, and discussing them before they’re needed is a great way to get everyone on board.

• Administrative information. Ensure that your family is aware of where your life insurance documents are stored. This could be in a safety deposit box, a secure filing cabinet, or digitally stored in a secure location. Are there combinations, passwords or technology (e.g. two-factor authentication) involved?
• How-to information. Make sure your family understands the claim process. Each insurer will have a different process, so take the time to explain it. Having this information handy will make the process easier for your loved ones when the time comes.
• Important contact information. Provide the details of the insurance company, your policy number and your agent or broker. This information is crucial when it comes time to file a claim.

Exploring and understanding your life insurance options is an important part of establishing the kind of security your family needs. Make sure you’ve discussed your coverage options with your agent as you plan the protection you’ll be discussing with your family.

Here are a couple of important decisions to consider.

Term and Permanent

Life insurance policies generally fall into two categories: term and permanent.

Term insurance is like renting insurance for a specific period (the term). It's straightforward and generally less expensive. If you pass away within the term, the death benefit is paid out to your beneficiaries.

Permanent insurance, on the other hand, provides lifelong coverage and has an investment component. It is often used for estate planning purposes and tends to be more expensive due to its lifetime coverage and cash value accumulation.

Make sure you understand both categories by discussing them with your agent.

Locking in Your Rate with a Guaranteed Insurability Option Rider

One way to ensure you can increase your life insurance in the future without further evidence of insurability is by adding a Guaranteed Insurability Option (GIO)¹ rider to your policy. This option allows you to lock in your rate now and provides the opportunity to purchase additional coverage at specified intervals — often when it would be otherwise unavailable.

Since there are often age and benefit limits to GIOs, it’s crucial to discuss this option with your agent early in your insurance planning.

You’re not just insuring your life; you’re insuring your family’s future and peace of mind. Understanding and communication are key components to a fruitful family discussion of life insurance, so don't delay these important conversations.

Contact your local ERIE agent today to protect what matters most with affordable and flexible life insurance coverage.