Life Insurance Coverage: What Most Financial Plans Are Missing
Since graduation, Marcus had concentrated on building a sound financial plan for his future. He maxed out his 401(k) every year, built an emergency fund, paid off his car, and started chipping away at his mortgage. By the time he turned 42, he had accumulated what he considered a respectable portfolio. He felt, for the first time in his adult life, genuinely financially stable.
Then his older brother suffered a heart attack at 48. He survived, but the weeks that followed were very stressful for everyone close to him. Watching his brother navigate recovery while his family scrambled to understand their finances, Marcus found himself asking a question he had never properly considered before. If something happened to him, what would happen to his family? His wife. His two kids. The mortgage they were still paying down together.
“One of the most common oversights is people who have built real wealth but haven’t updated their life insurance coverage since they first bought their plan,” says Joseph Aspelund, Branch Manager at David Lerner Associates.
“Your coverage should evolve as your assets and responsibilities grow. Insurance isn’t a set-it-and-forget-it decision. It’s a living part of your financial strategy.”
Key Numbers: The Gap between Wanting and Owning Coverage
51% of American adults have life reported they have life insurance according to the 2025 LIMRA Life Insurance Barometer report. Yet around 74 million Americans still need coverage, and 25 million Americans need more of it.
Even with around half of people reporting coverage, that percentage is still down from 63% in 2011—despite awareness for the need of coverage growing. This gap shows that many people see a value in life insurance, yet barriers exist that stop them from buying it.
One barrier lies in financial literacy. 90% of people considering life insurance say they need a better understanding of life insurance before they buy. Only two-thirds of those people had subsequently taken initiative to learn more.
Many also wait until a life event happens to consider coverage. While this may be when life insurance becomes top of mind, it can also be an overwhelming time to buy. Rather than waiting for a big change, evaluating the role of life insurance early can help you make a more informed decisions and potentially secure lower premiums while you’re younger and healthier.
Long-term strategies like life insurance may not feel like an obligation in day-to-day occurrences. But it’s purpose can help protect your family and legacy in the wake of unpredictability.
Two Different Tools, Two Different Jobs
Not all life insurance works the same way, and understanding the distinction is important before deciding what belongs in your plan.
Term Life Insurance
Term life insurance is exactly what the name suggests: coverage for a defined period, typically 10, 20, or 30 years. Premiums are generally lower, and the policy pays a death benefit if you pass away during the term. Once the term ends, coverage stops. It is often used to protect dependents during the years when income replacement matters most, such as while children are young, a mortgage is outstanding, or a business you own relies on your continued involvement.
Permanent Life Insurance
Permanent life insurance, including whole life and universal life policies, works differently. These policies are designed to last a lifetime, and many include a cash value component that can grow over time.
That cash value can be borrowed against, used to supplement retirement income, or passed on as part of an estate. Permanent policies can serve several roles within a broader wealth plan: providing liquidity for estate taxes, funding a buy-sell agreement for business owners, or simply creating a more predictable and generally income-tax-free asset for heirs at a time when other portfolio values may fluctuate.
Considerations for Life Insurance in Your Portfolio
One of the clearest ways to understand the role of life insurance in an investment plan is to think about what happens to a well-constructed portfolio without it. Market volatility, job loss, a sudden illness, or an unexpected death can all unwind years of disciplined saving in a very short time.
For investors who have already maximized contributions to qualified retirement accounts, some permanent life insurance policies may offer an additional feature: the potential to accumulate cash value on a tax-deferred basis. This means that, depending on the policy and individual circumstances, cash value may grow without being subject to being taxed annually.
What to Consider as a Young Adult Earner
For recent graduates and young professionals stepping into their first real income, insurance may feel like a problem for later. There are student loans to service, an emergency fund to build, and a 401(k) contribution to start. Insurance is often pushed to the back of the queue.
But actually, the most cost-effective time to buy life insurance is while you are young and healthy. Premiums are calculated based on numerous risk factors including age. There is often a lower risk calculated when you are young and healthy. This means a 25-year-old purchasing a 30-year term policy may pay significantly less per month than a 40-year-old purchasing the same coverage.
For a young adult, this can be beneficial when mapping out future concerns. Term insurance is typically fixed at purchase, which means if you buy a 30-year policy you are locking in that price when you are young and healthy (as long as your policy stays in force)
Making Insurance Work Inside a Financial Plan
Life insurance decisions should not happen in isolation from other long-term planning. Instead, they should be reviewed alongside retirement projections, estate planning documents, and investment allocations. Either when a big financial change occurs, or through a routine financial check-in, it’s important to review your policies and see what works for you currently and for the future.
Considering life insurance for the first time or reassessing your plan? Talk to one of our Investment Counselors at David Lerner Associates. We can walk you through a financial needs evaluation and find strategies that can protect your family and preserve your lifestyle.
Material contained in this article is provided for information purposes only. It is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. These materials are provided for general information and educational purposes, based on publicly available information from sources believed to be reliable. We cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. The subject of this article is fictitious and created for illustrative purposes only. It is based on events of a similar nature and should not be interpreted as a direct depiction of any specific individual, organization, or incident. Any resemblance to actual persons, living or deceased, or actual events is purely coincidental.