Despite the fact that most American families have less to fall back on financially than when the economic downturn began, ownership of individual life insurance has hit a 50-year low, according to a new study by Windsor-based LIMRA.
The Trends in Life Insurance Ownership study, conducted every six years by LIMRA, found 44 percent of households nationwide have individual life insurance. The number of households that have no life insurance whatsoever is growing, the study found.
Today, 30 percent of households (35 million) have no life insurance coverage, compared to 22 percent of households in 2004. Among households with children under age 18, 11 million have no coverage.
"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 Robert Kerzner, president and CEO of LIMRA, LOMA, and LL Global. "The numbers tell a grim story. Today there are 11 million fewer American households covered by life insurance compared with six years ago. A majority of families either have no life insurance or not enough, leaving them one accident or terminal illness away from a financial catastrophe for their loved ones."
More than 40 percent of Americans said 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. Among households with children under 18, four in 10 said they would have immediate trouble meeting everyday living expenses if the primary breadwinner died today. Another three in 10 would have trouble keeping up with expenses after several months.
"With so many families continuing to struggle financially, there has never been a more critical time for people to own an adequate amount of life insurance," said Marvin H. Feldman, president and CEO of the LIFE Foundation. "This study shows that Americans place great value on the need for protection and half of all families recognize that they need more life insurance than they have, and that’s good news. Now they need to take the next step, and get the coverage they lack before it’s too late."
