Study shows growing awareness of need for life insurance.
IN RECENT MONTHS, I have focused on the insurance needs of the Millennial and X generations as well as the special needs of children and business owners. This month, as we gather with friends and relatives to give thanks for all that we have in this great country of ours, I’d like to share some encouraging statistics that were recently reported in a LIMRA study, entitled “Trends in Life Insurance Ownership,” released at the end of September.
The study compared insurance data from 2010 and 2015. It found that nearly five million more people own life insurance today than in 2010. However, that increase is attributable more to the growth of the general population rather than to growth in the percentage of people owning life insurance. While it is good news that more families own some form of life insurance than in 2010, and that the downward trend has stabilized, there remains some 37 million American families — about 30 percent of all households — that are completely uninsured and at some level of financial risk should one of the primary wage earners die.
Good news on the Millennial front. According to the study, 70 percent of Millennials now own some type of life insurance, be it group insurance through their employer or individually owned. This is an increase of 48 percent over 2010. As Millennials age, they are getting married, purchasing homes and having children – all top triggers which encourage people to buy life insurance. As a result of this increase, studies indicate that today’s Millennials are more concerned about protecting their families’ well-being than prior generations at the same age.
Insurance ownership in households with children under 18 is on the rise. The 2016 study indicated that only one in five households with children under the age of 18 are uninsured. This amounts to 3.7 million fewer households than in the 2010 study. The encouraging news is that of the families that indicate they have no life insurance, 73 percent stated that they recognize the need, and two-thirds of those households said they are likely to purchase that needed insurance within the next 12 months.
Income replacement percentage has declined. While the increase in insurance ownership is encouraging, the 2010 study indicated that insured households had sufficient insurance to cover roughly 3.5 years of income should the breadwinner die unexpectedly. The 2016 study indicates that amount had dropped to three years, far lower than most industry recommendations.
Families state that they have other priorities that need attention before purchasing life insurance. Seven out of 10 American households say the reason they have not bought enough life insurance is because they have other financial priorities, such as paying off debt or saving for college or retirement. Nearly two-thirds say they simply cannot afford it. Consumers have consistently told researchers that they can’t afford life insurance, but the average consumer overestimated the amount they had to pay for life insurance by as much as 400 percent. Another reason indicated for putting off the purchase is because they don’t know how much or what kind to buy or what kind is right for them at this point in their lives.
To help you answer such questions, WPA now has a needs calculator available on our website. You can access this tool by going to www.wpalife.org, clicking on the “Insurance” tab at the top of the page, then scrolling down to the box that says “Calculate Your Insurance Needs.”All you need to do is follow the prompts and complete the worksheet; the system will then show you your total insurance needs. You can adjust the numbers as often as you’d like to create several “what if” scenarios.
The good news from the 2016 study is that nearly 45 percent of American households stated that they plan to purchase (or increase) their life insurance in the coming year – an increase of 80 percent from the 2010 study.
If you find yourself among that 45 percent, then visit the WPA website, calculate your needs and call your WPA agent or broker today. We’re ready and able to help you through the maze and explain your options in plain English. With all the options available to you, we’re sure to have a plan that fits your needs and budget.
From the Sales and Marketing Team at WPA,