As we live through the volatility and uncertainty of the economic picture in the United States of America, one can see how one factor can make such a difference in the economic welfare of a country and the standard of living that citizens get used to. No one could have imagined at the beginning of 2019 that in March of 2020, the GDP would be well on its way to a 30-40% decline in value. Who could have predicted unemployment would go from a low of 4% to as high as 25% in some areas? Who could have imagined an economy which was attaining all-time high records for profits, wage increases, record employment across all ethnic groups, home ownership, and general prosperity could be brought to its knees so rapidly? No one was prepared for the devastation brought on by the unknown culprit coronavirus (SARS-COV-2) causing COVID-19, a respiratory illness with deadly consequences for so many and so much suffering for others.
With draconian measures put in place to slow down the spread of the illness, the deaths and suffering hopefully have been somewhat diminished. In the meantime, the economic engine has been brought to almost a stand still; social, religious and athletic events have been cancelled, family gatherings have been discouraged, and even social distancing in homes have been encouraged.
As medical scientists race to find a vaccine, society languishes in despair and anxiety, wondering when life will return to normal. It craves the interaction of people which holds it together as a functioning unit.
With so much turmoil, businesses have had to make adjustments in an effort to stay alive. Working from home, schooling over the internet, curbside services, and home deliveries, etc. are efforts to offset the measures required to eliminate the COVID-19 pandemic. Businesses have also turned to the government for help to see them through this dilemma. In so many cases, this help has been the lifeblood keeping the businesses afloat. What would they have done without this infusion of capital? They would have died or had to make drastic changes to remain functioning.
Many small businesses were able to show they had a need for help, could meet the criteria to receive the help, and subsequently were able to stay the course.
This pandemic revealed an unspoken truth that many households were not and still are not prepared to financially take care of themselves even for one month. This is particularly glaring when one realizes nearly 70% of U.S production comes from consumer consumption, https//www.thebalance.com. If they are not spending, the economy grinds to a halt. Something had to be done to correct that situation. Again, a lifeline from the government was used through individual households receiving stimulus checks based on adults and dependents per household.
Life Insurance Death Benefits Essential
Here is where life insurance death benefits are essential to the financial security of a household.
Just like the unexpected happening in a society, an untimely death can wreak havoc on a family’s economic security, and unless there is a lifeline available to the survivors this event will be devastating. Where is it going to come from?
According to the 2014 Survey of Income and Program Participation and the 2014 S.S. Administration Supplement on Retirement, Pensions, and Related Contents, (https://www.cnbc.com/2020/01/17/heres-where-most-americans-are-really-getting-their-retirement-income.html) here is where retirees get their income;
- 6.8% age 60 and up who work less than 30 hours per week get money from SS, pensions, and workplace retirement (401)
- 40.2% receive income through SS alone
- 14.9% have no pension, savings, or SS
- Use of social security alone rises from 52.9% aged 60 to 65, 85% of those aged 66 to 75, and 84% of those aged 76 and older.
Social Security is the main lifeline, but it still has some limitations which affects how much a family can still depend on that source. Age limitations of dependents, deceased’s wage earning history, surviving spouse health, and age qualifications are a few to be considered. Even with the best case scenario, less than 50% of household expenses will be covered by this source.
Life insurance death benefit from an in force life insurance policy is the only lifeline which can with proper planning assure the economic stability of a household. It can replace 100% of the earning power lost due to the untimely demise of a loved one.
Public Response to Pandemic Threat
As the COVID-19 pandemic has affected the rest of the economy, an interesting scenario is being played out with the purchase of life insurance during this time.
Young adults appear to be panic buying due to the coronavirus scare even though they are the least at risk for dying. There has been a 13% increase in life applications among the under 44 age group, with a 9% jump for 45-59 years old, and 0.4% in the 60 plus category. The spike in applications is in the term insurance products according to https://alfred.stlouisfed.org.
Life insurance death benefits also have a major impact on the gross domestic product and would be sorely missed if not included in factors involved with makeup of gross domestic product. It is estimated by https://www.ssa.gov in 2019 that 4.73% of gross domestic product was attributable to death benefits from inforce life insurance policies. This translates to approximately 762.1 billion dollars. Pretty substantial stimulus check to those who needed it most.
Just as the pandemic has not affected every household with its illness consequences, death in an individual family does not immediately affect every other household yet the ramifications of the death does have a rippling effect which has to be dealt with. People affected by the virus are not left out on the street to deal with the issue alone as others we refer to as first responders assist the afflicted. Such is the case of the death dilemma. Hopefully, loving and caring individuals will assist in the immediate hour of need while other long term plans can be put into place. Bless the Mom and Dad who had the foresight to prepare for this untimely event by including in their financial plan the resource of life insurance which waits quietly until needed then without fanfare does its job in healing the financial insecurity associated with the death.