Current Economic Conditions Require That Your Clients
Re-examine Their Life Insurance
Life insurance was once considered a basic, fundamental need. But there was a substantial shift in consumer opinion in the past 20 years, with longer life expectancies and increasing home and stock values leading to a general lack of urgency for such coverage. Enter 2008 and the next shift. Consumers are once again re-examining the amount and types of life insurance they have in their portfolios, as job losses and salary reductions caused them to cut household expenditures. Americans realize that economic conditions have damaged their asset portfolios and their ability to save. They realize, too, that those fiscal issues are the key reasons they have an even greater need for life insurance. And those who don’t understand on their own that they need to close the gap could sure use the assistance of a financial advisor.
Online survey conducted by: Prudential (2009)
Demographics of respondents:
Male & Female sole/joint heads of household
30-59 years old
Household income $50,000 or more
At least $25,000 in total savings and investments
Have at least three of the following financial
products: Individual life insurance, Long term care insurance, Traditional savings accounts, Mutual funds, Stocks or bonds, Annuities, Defined contribution plans, IRAs, Estate plan/will
Current life insurance ownership:
18% - None
22% - Group only
20% - Individual only
40% - Both Group and Individual
Among those who currently own life insurance:
70% have cut back on everyday expenses
32% have used savings for routine bills
80% have maintained their current coverage
14% have increased their coverage
They chose to keep their coverage because:
95% realize it will cost more as they age
93% say that protecting their family/loved ones is a must
59% don’t want to go through a health exam for a new policy
They are relying on their life insurance for:
Paying final expenses
Paying off mortgage or other debts
Replacing income for family
Paying for children’s education
Leaving a legacy to their heirs
However, many are still underinsured and not confident that their loved ones could maintain the same lifestyle if they were to die. That varies, though, with the amount of coverage they have:
Of those with individual coverage equal to 6 times their annual income or more vs. those with no coverage:
52% are somewhat confident vs. 45%
6% are not very confident vs. 22%
Other notable conclusions:
- 70% of consumers realize the importance of working with a financial professional who will educate them about financial matters, including life insurance
- 66% realize the importance of having individual life insurance – apart from employer-provided policies – because of the increasing number of job losses
- 75% prefer a death benefit to be in effect for life, even if they must pay more for such coverage
- 95% recognize that waiting until older to purchase life insurance could mean significantly higher premiums
When you have clients who need to re-evaluate current coverage or who are considering purchasing the protection provided by life insurance products, let LLIS help. We are happy to review current policies, without charge, or to help your clients start from scratch.
DI policy reviews: Kathy Copack and Jill MacNeil
Annuity reviews: Jerry Skapyak
LTCi and all other policy reviews: Mark Maurer
To view complete study results, click here (PDF).
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