Broker Check

Life Insurance: Americans More Vulnerable Than Ever

| February 11, 2019

Most Americans don’t have enough life insurance. Many have none at all. And every one of these folks are subjecting their families and their assets to substantial risk.

To dive deeper into the American life insurance coverage gap, and more importantly, what can be done about it, we’re starting a blog series. We’ll examine the facts, the myths, and help separate the sound information from the noise.

This first post focuses on the size of the coverage gap and why it exists in the first place.

Risking Everything

The number of Americans with life insurance is at a 50-year low, according to financial research firm LIMRA. It’s created a $15.3 trillion unmet life insurance need, and the decline is ongoing:

This is despite 85 percent of consumers agreeing that most people need life insurance, yet only 62 percent say they have it, also according to LIMRA.

And yes, it’s also despite 70 percent of households with kids under age 18 saying they’d quickly have trouble with expenses if a primary wage earner died today, per LIMRA as well.

In other words, most people need life insurance, yet many either don’t have it, or don’t have enough.

As a result, they’re risking the well-being and financial security of their families.

Why Take on Risk?

Since 1960, less people have been getting life insurance because:

They’re underinformed
I understand most people don’t want to discuss life insurance, but that’s also why most people don’t know how it works, or the benefits. But if tragedy strikes, you’ll be glad if you have it to cover funeral costs, living expenses, debt and more.

Employers don’t provide itMore employers used to provide life insurance benefits. However, it’s less common today, leaving more people at risk.

They have misconceptions about costs and benefits
LIMRA statistics say 83 percent of consumers estimate life insurance to be three times the actual price, while almost half of young consumers think it’s five times the actual price.

For instance, most Americans think a 20-year, $250,000 level term life insurance policy for a healthy 30-year-old costs $400 per year.

It’s actually $150.

Are any of these reasons worth your family not being taken care of times of need? Certainly not for a nominal annual premium.

Navigating the Life Insurance World

If most people don’t have enough life insurance, they probably also don’t know too much about what’s available, where to get it, and so on.

In the next installment of this series, we’ll look at the different types of policies out there, how you buy life insurance, and specific family situations for which it’s beneficial.

Securities offered and sold through CoreCap Investments, Inc., a registered broker/dealer and member FINRA/SIPC. Advisory services offered through CoreCap Advisors, Inc., a registered investment advisor. Cornerstone Financial Services and CoreCap are separate and unaffiliated entities.