That economic hardship is taking a
heavy toll on American families has been made abundantly clear by
data from consulting and development organisation LIMRA showing
that ownership of individual life insurance has hit a 50-year
low.
“Clearly, more American families
are living on the edge – surviving paycheck to paycheck – and, as
our new study suggests, too many without the safety net that life
insurance provides,” said LIMRA CEO Robert Kerzner.
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“Today there are 11m fewer American
households covered by life insurance compared with six years
ago.”
Specifically, LIMRA found that 30%
of households (35m) have no life insurance coverage compared to 22%
of households in 2004. Among households with children under 18,
which arguably have the greatest need for life insurance, 11m have
no coverage.
LIMRA found that more than 40% of
Americans say a major reason they have not bought more life
insurance is because they have other financial priorities right
now, such as paying off debt or saving for retirement. However,
LIMRA noted that the drop in life insurance ownership is not
because families are not feeling vulnerable.
Among households with children
under 18, 40% say they would have immediate trouble meeting
everyday living expenses if the primary breadwinner died today.
Another 30% would have trouble keeping up with expenses after
several months.
But it is not that Americans are
not aware of risks they are taking with half of households feeling
they need more life insurance, the highest level ever. Moreover,
24% of households with children under 18 want to consult a
financial professional about their life insurance needs and a
quarter of all households plan to buy life insurance in the next
year.
LIMRA identified lack of
information on life insurance as one of the biggest obstacles faced
by consumers. Almost 80% of households currently do not have a
personal life insurance agent or broker to turn to and most of them
say they never did.
“As an industry, we need to reach out to consumers and educate
them about the various ways they can purchase life insurance,” said
Kerzner.
