September is Life Insurance Awareness Month. With this in mind, let me try to explain the purpose of life insurance, who wants it and who needs it.

Being a life insurance agent requires training. In the first class I took, the instructor asked that if we had a machine that printed a $100 bill every day, would we insure it? The entire class said “absolutely.” Then the instructor said, “Aren’t we all like that machine, going to work every day producing $100 bills?” So life insurance replaces the income lost because of premature death.

I think we can all agree that a person who earns income, and has other people dependent on that income, wants life insurance to protect the future of the people who depend on him or her. In simple words, if you love your family and they depend on your income, you want life insurance and they need you to have life insurance.

What if you don’t produce income, but provide care for someone you love? A stay-at-home mom who is a house cleaner, cook, taxi driver and bedside nurse; a child caring for an aging parent; the caregiver of someone with special needs.

All of these people know their services need to continue, so they want life insurance.

I own a business and being responsible, I insure all of my equipment. Then one day, my best employee got sick and after a few days I realized all my equipment did not work as well without this key employee. I also realized if this employee died, it would cost me money to replace him. I need life insurance on my employees.

The loss of a child is the worst event I can imagine. The resources we would all use to save our children if they were sick is beyond measure. The reality of children dying is unpaid medical bills and funeral cost. Parents need life insurance on their children.

One benefit of employment can be life insurance. The average person changes employment every seven years. With the change of jobs and the desire to retire with life insurance through work is nice, but cannot always be depended on.

Only 39% of Americans have $1,000 to cover an emergency. The death of a loved one is an emergency. The death of a loved one is a certainty. A funeral cost of $10,000 is not unusual. The promise to provide for your family for 20 or 30 years will require hundreds of thousands of dollars.

Life insurance lets us pay a future bill in installments before the bill comes due. In that same class I took years ago, the instructor called premiums discounted dollars. You give an insurance company small amounts of money today for a guaranteed larger amount sometime in the future.

All of us, depending on our phase in life, will need life insurance or want life insurance. If you are dependent on someone, you need them to be insured. If you love and care for someone, you want to be insured.

The need for a Life Insurance Awareness Month is because while 84 percent of Americans say most people need life insurance, 41 percent of the population does not have it.

In my next article, I will explain how to determine how much life insurance you may need and the different types of life insurances.

Bob Hollick is a State Farm Insurance agent based in Washington.

To submit columns on financial planning, investing or business-related matters, email Rick Shrum at

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