Filed Under:Life Insurance, Life Products

The shocking statistics behind the life insurance coverage gap

Most Americans don't have enough life insurance. Many Americans have no life insurance at all. Why? According to research, the most common reason given is that they have competing financial priorities. The second most common reason? They think they can't afford it.

Here, we take a look at the shocking numbers behind the coverage gap in America and some of the misconceptions that might be causing it to persist.

 

Life insurance need


85 percent of consumers agree that most people need life insurance, yet just 62 percent say they have it.

Source: LIMRA’s Life Insurance Barometer Study 2013

Underinsured


44 percent of U.S. households had individual life insurance as of 2010 — a 50-year low. In 1960, 72 percent of Americans owned individual life insurance. In 1992, 55 percent owned it.

Source: LIMRA’s Trends in Life Insurance Ownership study

Underinsured


40 percent of Americans who have life insurance coverage don’t think they have enough.

Source: Genworth LifeJacket Study 2011

70 percent


70 percent of U.S. households with children under 18 would have trouble meeting everyday living expenses within a few months if a primary wage earner were to die today. 4 in 10 households with children under 18 say they would immediately have trouble meeting everyday living expenses.

Source: LIMRA Household Trends in U.S. Life Insurance Ownership, 2010

15.3 trillion


$15.3 trillion: Estimated unmet life insurance need in the United States

Source: LIMRA’s 2012 report “Closing the Insurance Gap: One Household at a Time”

 overestimate

 

Why aren't people buying more coverage? Unfortunately, many Americans overestimate the cost of life insurance:

  • 83% of consumers say they don’t purchase more life insurance because it’s too expensive, but consumers believe life insurance costs nearly 3 times the actual price.
  • $400: What most Americans believe a 20-year, $250,000 level term life policy for a healthy 30-year-old costs annually.
  • $150: What it would actually cost.

And they don't understand life insurance, either:

70 percent of Americans failed a recent 10-question basic life insurance IQ test.

 Source: LIMRA


See also:

Life insurance by the numbers

How to leverage Life Insurance Awareness Month

5 events that increase the need for life insurance


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