Filed Under:Life Insurance, Life Products

Coverage gap among Gen Xers has widened

The New York Life survey shows the life insurance “gap” has grown since the Great Recession.
The New York Life survey shows the life insurance “gap” has grown since the Great Recession.

Inadequate life insurance coverage, most notably Americans in the middle market, has long been a depressing industry fact. One might have thought the magnitude of the problem had lessoned since the Great Recession, as Americans took steps to put their financial houses back in order.

In fact, however, the problem has worsened: A new survey of 1,000 Americans age 25 and over with dependents, conducted by The Futures Company on behalf of New York Life, shows the life insurance “gap” — the difference between the median amount of life insurance coverage Americans have and the amount they require based on self-reported needs — has grown.

And this chasm is widest among post-baby boom Generation Xers. The report pegs the coverage gap in 2013 at $448,996 versus 362,688 at the height of the Great Recession in 2008 — an increase of 24 percent.

GenX Life Insurance Coverage Gap

Year

Median Amount of Life Insurance Coverage in Place

Amount Needed to Cover Self-Reported Needs

Coverage Gap

2013

$260,000

$708,996

$448,996

2008

$400,000

$762,688

$362,688

What accounts for the growth in the gap? Chris Blunt, president of the insurance group at New York Life, attributes the change to the impact of the economic downturn on Gen Xers, putting them at increased risk of financial loss.

The survey adds the coverage gap for Gen X is 40 percent greater than the median gap for all Americans and “significantly higher” than other age groups.

 

Median Amount of Life Insurance Coverage in Place

Amount Needed to Cover Self-Reported Needs

Life Insurance Coverage Gap

Total Sample

$220,000

$540,000

$320,000

Millennials

$200,000

$570,744

$370,744

Gen X

$260,000

$708,996

$448,996

Boomers

$200,000

$467,016

$267,016

“What this study makes clear is that the cost of doing nothing can be enormous at any age, but Gen Xers are clearly most at risk and most exposed by inadequate life insurance coverage,” says Blunt in a press statement. “This five year comparison study brings the challenges that Gen X is facing into stark relief, and hopefully will help add to a broader national conversation about how this generation can protect what it has and build for the future.”

Timed for release during Life Insurance Awareness Month (LIAM), the New York Life report echoes similar studies conducted at this time last year. Among them, a 2012 ING U.S. survey that found 61 percent of families had never calculated their life insurance needs.

The New York Life survey also finds the gap impacts more than half (56%) of Gen Xers. Less than one in five (19%) stated they have enough insurance to cover everything they expect their insurance to pay for.

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