The start of a new year is always a good time for people to review their financial situation, including their life insurance coverage. According to LIMRA’s 2016 life insurance ownership study, 40% of U.S. households (50 million) recognize they need more life insurance coverage.
LIMRA data suggests that even more households are at risk. Based on LIMRA’s Life Insurance Needs Model, 48% of U.S. households (60 million) have a life insurance coverage gap of $200,000 on average.
What’s at stake?
Among households with children under 18, four in 10 say they would be in immediate financial trouble if a primary wage earner died today. Another three in 10 would have trouble keeping up with basic living expenses after several months. But across all ages under 65, the income replacement rate (number of years covered) has declined since 2010.
Why don’t they buy?
Eight in 10 U.S. households who believe they need more life insurance say they don’t buy because of other financial priorities or they can’t afford it. But prior research shows that, on average, people estimate life insurance to cost three times what it actually does.
Six in 10 say they don’t know what to buy or how much they need. One of the biggest obstacles to purchasing is a lack of information (an increase of 23% from 2010). More than a third of U.S. households who believe they need more life insurance say they haven’t purchased because they haven’t been approached by a financial professional.
This is an opportunity for financial professionals to reach out to their clients and engage with new prospects. LIMRA’s research shows that the majority of households (56%) said they were more likely to buy when advised by a trusted financial professional. And more than one-third (35%) of married couples with dependent children want to speak with a financial professional about their life insurance needs.
Across all age groups and income levels, insured households said they want to review their life insurance coverage annually. This is significantly higher than in 2010.
In any given year, births, deaths, marriages, divorces, job changes, moves and health issues will inevitably impact a percentage of your clients, and may mean some changes are needed to make sure they are adequately covered. Reaching out to provide an annual review only makes sense.
For more information about LIMRA’s life insurance ownership study, members can read Life Insurance Ownership in Focus.
About LIMRA: LIMRA, a worldwide research, learning and development organization, is the trusted source of industry knowledge, helping more than 850 insurance and financial services companies in 64 countries. Visit LIMRA at www.limra.com.