RADNOR, Pa. – Consumers recognize the important role that life insurance plays in helping to cover final expenses as well as aiding with estate planning and wealth transfer. However, consumers generally lack understanding that life insurance can help address some of their top current and future financial concerns, such as health-related costs, retirement savings, a potential loss of income or even the cost of college tuition.
This according to new research from Lincoln Financial Group, released in September during Life Insurance Awareness Month.
“Sixty-five percent of consumers believe life insurance is a necessity and they recognize the core value it provides,” said Mike Burns, senior vice president of Life and Customer Solutions, Lincoln Financial Group. “However, there is a broad array of additional financial concerns that keep consumers up at night that life insurance can also help to alleviate. Life Insurance Awareness Month is an ideal time to raise public awareness around the various ways life insurance can provide financial protection throughout the course of one’s life – in times of opportunity as well as those of unfortunate circumstances.”
According to the study, which polled life insurance owners and those that said they would consider purchasing it within the next 12 months, one of the greatest financial concerns for consumers is the cost of healthcare in retirement. Sixty-six percent of people cited this as a pressing concern, however, only 14% of people were aware that life insurance can potentially help offset the cost of healthcare in retirement. Similarly, more than 50% of consumers were concerned about outliving their money in retirement with just 11% understanding that life insurance can help protect against longevity risk.
“Education on the value of life insurance can come from a few different sources. While some may work with a financial advisor, others might look to their employer for information – some may look to both,” said Dick Mucci, president of Lincoln’s Group Benefits business. “What’s most important is that consumers receive the information and the coverage they need. Life insurance is often sold through the workplace, and employer communication is a great channel for education that can touch multiple generations.”
Generational concerns and differences
Lincoln’s ongoing research shows that consumers are thinking about their finances earlier in life, including the purchase of products like life insurance. For Millennials and Generation X, the strongest trigger for thinking about life insurance is the start of a new job or during annual open enrollment for employee benefits. In contrast, those age 55 and older said their primary motivator for purchasing life insurance was getting married. This finding underscores the importance of life insurance at various stages in life, including younger years when financial priorities may revolve around paying off student loan debt or credit card debt.
“Today’s advisors must educate their clients on the realities of life insurance, and what it can help them to accomplish,” said Andrew Bucklee, senior vice president and head of Insurance Solutions Distribution for Lincoln Financial Distributors. “Starting these conversations early is critical, as life insurance provides value across generations – for any age and stage of saving and retirement planning. Today’s products are designed to meet the needs across generations.”
After learning life insurance could help cover the potential costs of health care in the future, 49% of consumers said they would consider purchasing life insurance. Similarly, while only 18% initially believed life insurance was a solution that could offset a loss of household income, 43% of consumers said they would consider purchasing it after was this explained to them.
For more information about Lincoln’s Life Market Study, please open this presentation at Lincoln’s website.
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About Lincoln Financial Group: Lincoln Financial Group provides advice and solutions that help empower Americans to take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust its retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, as well as to guard against long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (LNC) and its affiliates. The company had $223 billion in assets under management as of June 30, 2016. Learn more at: www.LincolnFinancial.com.