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Jim Lentini: Protection for good times and bad

Business Commentary

Posted: August 16, 2010 5:05 p.m.
Updated: August 17, 2010 4:55 a.m.

As the Great Recession ends, generations that never experienced the Great Depression of 1929 now see reasons for cushioning their income from the uncertainties of life, including disability, illness and accidents. It was a year of reckoning for Americans in 2009. The dependency on credit and excessive spending, which characterized much of the previous decade, has been replaced by a greater emphasis on saving money and preparing for the unexpected.

 In 2009, savings pushed to a positive 4 percent of income for the first time in the decade. Remember, it wasn’t that long ago, in 2005, the savings rate was 0 in the U. S.  According to, some experts see that savings rate of 4 percent will rise to between 8 to 12 percent in the near future, the highest level since 1985 when Americans saved 11 percent of their personal income on average. That means, if we are saving more, we are spending less. This means that consumers are not feeling secure with the economy, tax increases and government spending.

Recent survey results are testament to the birth of a new, prudent American consumer, and a renewed focus on life and disability insurance safety nets that are so important during recessionary periods as well as during boom times. This past year, the LIFE Foundation, a nonprofit insurance industry group, reported that 56 percent of Americans were convinced that it was more important to have life coverage as a result of the current economic slump. Most respondents had taken steps to add to their policies rather than cut back. That is encouraging and beneficial to take care of families, especially in times of uncertainty.

While the turnaround in the savings rate is certainly positive, for many Americans it might come as too little, too late. Today, most households face a number of financial responsibilities. Americans have more personal responsibility for their retirement savings and health care, and they are often dependent on two incomes to maintain basic living expenses. The U.S. workforce is sandwiched between not only their own careers, but also the care of both their children and parents.

Given the new realities, Americans will likely need to save substantially more than what we are averaging, despite the recent increase in our savings rate. For those who find themselves without the recommended six months of income saved for emergencies, life and disability insurance can be an affordable lifeline in the event of a disability or premature death. 

And, many who are disciplined and have the recommended cushion, insurance mitigates the fear that their savings will run out before they are back on their feet. Having adequate life and disability insurance as a safety net will go a long way toward creating financial leverage in both good times and bad. Be sure to discuss life and disability insurance coverage with your financial advisor. And, remember to periodically review your coverage’s to keep benefits in line with your financial needs and goals for your family.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments Inc. His column reflects his own views and not necessarily those of The Signal.


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