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Recent Study Spotlights Life Insurance Gap for Many Americans

Meeting2As an insurance producer, there’s a very good chance that many of your clients are not prepared for the loss of their household’s breadwinner. At least, that’s the takeaway from a recent report from the Life Insurance Management Research Association (LIMRA).

A study of middle-market consumers, defined as those between the ages of 25 and 64 with an annual household income of between $35,000 and $99,999, discovered only 46% of this demographic own individual life insurance – highlighting a huge hole in the financial security of many Americans.

While 60% of middle-market consumers owned group life insurance, the coverage was only qualified for as long as they were employed. Additionally, these policies often provided less coverage than individual policies, meaning even those with coverage could find themselves at a disadvantage.

“Life insurance is the one product that can help families keep a roof over their heads, provide for basic living expenses and allow time to recover and heal from the loss of a loved one,” Robert Kerzner, president and CEO of LIMRA, LOMA and LL Global, said in press release. “LIMRA’s research shows that people do not fully understand the risks they take by not having adequate life insurance coverage.”

This becomes clear when the majority of middle-market consumers said they were not financially prepared for the loss of a family member. In fact, 51% said such a loss would force them to make drastic or significant financial changes. And a family member’s passing is not the only circumstance that could lead to this, as disability could prevent an individual from earning an income as well.

With September being Life Insurance Awareness Month, there’s no better time for producers to double up on their efforts to ensure their clients receive the coverage they need.

Consumers hungry for information

Despite what some people may think, data shows consumers are interested in learning about their life insurance options, including how much coverage may be necessary.

“Our research revealed that half of middle market consumers are interested in learning how much life insurance coverage they need,” Kerzner continued in the same press release. “Efforts like Life Insurance Awareness Month can be a catalyst to start that important discussion.”

Appealing to emotion

As virtually every insurance producer is all too aware of, purchasing life insurance is a decision often motivated by fierce emotion. Men and women think of their families – spouses, children and other loved ones who will be left behind after they’re gone.

With data showing that most middle-market consumers would be put into serious financial flux following the loss of a family member, it’s clear that proper insurance planning remains a vital tool for individuals to ensure the people they care about are taken care of.

Thinking about the future

Life insurance isn’t just about providing for family after the loss of a loved one. It can be a strategic way to transfer wealth to the next generation, provide for long-term care and more. The right policy can also be an invaluable part of a retirement income strategy. Life Insurance Awareness Month is the ideal time to remind consumers these benefits go well beyond leaving loved ones with extra income. These policies have been used with great success by individuals hoping to secure a comfortable retirement.

And it’s not just older individuals with their minds on a post-work life. Three-quarters of Americans are worried about having enough money to retire, a recent survey from Harris Poll found. Only 35% of survey respondents said they believe Social Security will still be an option when they retire. That figure is even lower for Millennials and Generation X.

Of course, life insurance isn’t the only option. A fixed annuity or other insurance products can also be used for retirement purposes. The important thing is to make sure your clients understand the full range of options and benefits at their disposal.

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