If you read The Wall Street Journal, or subscribe to a hometown newspaper that includes “The Wall Street Journal Sunday” in its business section, you’re probably familiar with the “10 things” articles supplied by WSJ’s MarketWatch.com, which usually reveal things that specific entities – fertility clinics, CEOs, pets, cruise providers, life insurance agents, etc. – “won’t tell you.”
It was life insurance agents that were the focus of this past Sunday’s feature. The piece by Daniel Goldstein, titled, “10 things life insurance agents won’t say,” was illustrated with an image of a family pouring dollars into a “life insurance” machine which trickled out mere cents as a byproduct.
Hardly objective imagery.
While I recommend you check out all 10 the article’s “things,” the first one provides plenty of fodder. No. 1 claims “You actually have too much life insurance,” going on to say many people are buying too much life insurance, or buying the wrong kind.”
The piece goes on to mention “the insurance industry argues that, if anything, most Americans have too little insurance. About 30% of U.S. households have no life insurance at all, according to LIMRA…”
The first “thing” finishes with the author saying there is no “cookie-cutter” answer to the “correct” amount of life insurance one should have, and that financial advisors say a family breadwinner should have enough insurance to cover the mortgage, and people should then decide if they need to also replace lost income that could help with daily living and goals like college or retirement.
As one commenter to the article points out, if there is no “correct” amount, how do you know what is too much?
The recent Life Insurance Gap survey from New York Life found that while most families say they want enough life insurance to cover 14 years of lost income, they only have enough to cover 3 years. The median shortfall between how much coverage families have in place compared to how much they say they need was $320,000 in 2013, up from $289,000 in 2008. In 2013, the median amount of life insurance coverage families had in place was $220,000 compared to the median amount they said they needed of $540,000.
LIMRA data show that half of U.S. households (58 million) say they need more life insurance, and that the average amount of coverage for U.S. adults has declined to $167,000, down $30,000 from the average coverage in 2004.