While the majority of U.S. adults have some level of life insurance coverage, there are sizable knowledge gaps among consumers that may be preventing them from understanding the full potential of their policies.
That was the impetus behind the 2020 Life Settlement & Retirement Survey, recently released by Harbor Life Settlements. The survey found:
- 43% of policyholders do not know they can sell their policy in a life settlement.
- 57% of policyholders do not know what a viatical settlement is.
- 11% do not know what type of life insurance they have
- 1 in 5 retired seniors don’t feel they have enough money to cover their medical, living, and retirement expenses comfortably—yet 68% of seniors still have an active life insurance policy.
“These startling numbers show a large percentage of Americans are paying policy premiums each month, but are unaware of the full financial potential of their life insurance coverage, ” said Lucas Siegel, Founder and CEO of Harbor Life Settlements. “At Harbor Life, we recognize the life insurance industry is complex, but we also believe it is vitally important people understand the wide range of financial benefits that come with having a life insurance policy. In fact, we know if Americans took full advantage of life settlements, that benefit alone could cover nearly half of the $300 billion seniors are paying in long-term care costs each year.”
When it comes to Americans 55 and older, the survey shows one in five retired seniors do not feel they have enough money to cover their medical, living and retirement expenses comfortably. In fact, retired seniors are 900% more likely to be concerned about having enough money to cover their expenses when compared to retirees under the age of 55. Additionally, the largest consumer knowledge gap around life and viatical settlements resides with seniors. Sixty-three percent of seniors do not know what a life settlement is, compared to 53% of people 54 or younger, and 75% of seniors do not know what a viatical settlement is, relative to 66% of non-seniors.
“These findings are unfortunate considering seniors are the most likely group to be eligible for a life settlement. Also knowing 20% of retired seniors are struggling to comfortably cover their expenses, while more than two-thirds of them still carry an active life insurance policy, makes it imperative that we close the knowledge gaps discovered in our study,” added Siegel. “We view these findings as an opportunity to work closely with both consumers and financial advisors to improve knowledge and awareness around life settlement options and other living benefits of life insurance.”
Harbor Life conducted the national survey of 1,702 U.S. adults to better understand people’s knowledge of life insurance benefits and options, with the goal of uncovering insights that help individuals make better decisions around financial and retirement planning.
For additional survey findings related to consumer motivations for having a life insurance policy, measurements of how life insurance needs evolve over one’s life, what factors prevent Americans from buying life insurance policies, and more click here.