We are all being reminded just how unsettling times of uncertainty can be. For boomers, and particularly at this moment, ensuring that your financial plan is safeguarded is crucial—and this starts with knowing the fundamentals.

While many have received and followed advice to budget, pay down debt and save for the future, another essential decision is to incorporate a level of financial protection.

And yet, AIG Life & Retirement’s recent Life Insurance IQ Study shows that while Americans believe in the value of life insurance, half do not have life insurance or are unsure if they do.

So, what do boomers need to know about life insurance in order to create security for their future? Here is where we found the respondents to our Life Insurance IQ Study had the opportunity to learn more:

The Basics

Before you can grasp the nuances of life insurance, you must master the basics, like how much coverage you have and how much you need. Among those who do have life insurance, about 25% do not know the value of their coverage.  And, among couples, about the same number do not know how much life insurance coverage their partner has.

If you’re someone who doesn’t yet have life insurance, and aren’t sure how much you need, there are plenty of resources to help—from online calculators to financial professionals who can be there with you every step of the way. You’ll also want to determine what type of life insurance best suits your individual needs, as there are several to choose from.

Life Insurance—Beyond Leaving a Legacy

Most people know that life insurance provides a death benefit, which can allow for a meaningful amount of money to be passed on to your loved ones after you’re gone. This payout from your life insurance could be used to pay off a mortgage, handle some credit card debt or take care of a young child’s future college tuition. Some or all of your death benefit could also be used to make a donation to your favorite charities or used for whatever other purpose you choose.

But where our study found a big knowledge gap was when it came to understanding the crucial role life insurance can also play while you are still living. For those financial what-ifs—things that can be difficult to think about, but we need to prepare for—life insurance can offer protection and peace of mind.

Building a supplemental retirement income stream

Some life insurance policies—typically called permanent life insurance—have what is referred to as cash value. You can draw from this money for any number of reasons, including using it as supplemental retirement income in your golden years. That cash value, for example, can serve as a helpful form of protection for when the market swings down. In those moments, you may choose to draw from your policy’s cash value instead of your retirement savings, which could give investments the time to recover when the market rebounds.

Covering health care related costs

According to our study, Americans fear chronic illness more than running out of money or dying young. But what many boomers don’t realize is that they can use certain types of life insurance to help them, should they need help to cover health care expenses or other medical bills.

There are several ways that permanent life insurance can be used to cover such costs, for example accessing the policy’s cash value, taking out a policy loan or through a rider, such as a chronic illness rider, that allows a policy owner to access a portion of their death benefit while still living¹.

Building your plan around potential concerns before they become immediate needs can help you receive a level of care you are comfortable with.

Taking Action

Life insurance can help solve for financial challenges beyond leaving a legacy and taking care of loved ones after you’re gone. Still, our study showed that too many Americans are uninsured.

If you’re looking to boost your life insurance IQ, consider working with a financial advisor. Our study found that those who do are more likely to have a life insurance policy and demonstrate a better understanding overall around life insurance—ultimately giving them a leg up on their preparedness for the future.

Policies issued by American General Life Insurance Company (AGL), Houston, TX except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life). Issuing companies AGL and US Life are responsible for financial obligations of insurance products and are members of American International Group, Inc. (AIG).

¹In order to access accelerated benefits from a chronic illness rider, the insured must first be certified as chronically ill by a licensed health care practitioner. This is not a replacement for long term care insurance.