Ownership of individual life insurance has hit a 50-year low, according to a new study.
The Trends in Life Insurance Ownership study found that only 44% of U.S. households have individual life insurance. The number of U.S. households that have no life insurance whatsoever is growing. Today, 30% of households (35 million) have no life insurance coverage, compared to 22% of households in 2004. Among households with children under age 18, 11 million have no coverage.
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.
According to the study, 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, the drop in life insurance ownership is not because families are not feeling vulnerable. Among households with children under 18, four in 10 say 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.
Half of households feel they need more life insurance—the highest level ever. Moreover, 24% of households with children under 18 want to speak with a financial professional about their life insurance needs; and a quarter of all households plan to buy life insurance in the next year. According to the study, life insurance beat out all other sources of financial assets or income that Americans expect to use to help pay bills and to maintain their lifestyle in the event of the primary wage-earner’s death.
About one in four middle-market households admit they don’t know how to obtain or reach their financial goals. One of the biggest obstacles is lack of information. Almost eight in 10 U.S. households currently do not have a financial advisor to turn to and most of them say they never did.
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