Let’s face it, most of us have first-hand experience with the current economic downturn. If you are one of the lucky ones who have gone unscathed, you probably know people whose lives have been negatively impacted. The bottom line is, few of us are unaffected by our current economic malaise.
This economy shows us how precarious a family’s finances can be. Being in the life insurance business, I can see how much the economy is affecting people when I speak to them about purchasing a life insurance policy or when I do a periodic policy review with my clients. No matter how difficult the economy is, I believe every bread winner of a family should have some life insurance protection for their family. I usually ask, “if you think it’s tough now, how difficult would it be on your family if you were no longer around to provide for them.” Then, with a little shifting of expenses (e.g., dropping one dinner out per week), I show my clients that their families can’t afford for them not to have some life insurance protection.
These conversations happen a lot more than they used to so, naturally, I did some research to see if how widespread this belt-tightening is in regards to life insurance. When I need information like this, I always turn to LIMRA, an organization that compiles this kind of data. The following statistics provided by LIMRA are quite alarming:
- 41% of U.S. households have no life insurance at all.
- 30% of American households are under-insured (meaning their policies don’t offer adequate protection for their families).
- More than 50% of Gen X and Gen Y households need more life insurance.
- The top two reasons people don’t buy life insurance are: competing financial priorities and they think they can’t afford it.
I would venture to guess that many of these people, by shifting some of their expenditures around (as I described above), would be able to afford at least a small term policy. Before you consider me to be a heartless man, I should say that, yes, there are many people who can’t find the wherewithal to buy a policy, no matter how much shifting they do. I totally understand that, but I do speak to so many folks that have the ability to shift some things around a bit in order to be able to afford a policy. These are the people I am referring to.
My father passed away when I was thirteen years old, leaving behind a wife and three young boys. When he was alive, I could often hear him discussing finances, which were usually tight, with my mother. I’m guessing that, because of his financial condition, he didn’t think he could afford a life insurance policy. Well, I’m also guessing that if he had been able to witness what my mother had to go through to keep the roof over our heads and food on the table after his passing, he probably would have rethought his decision not to purchase a life insurance policy. He definitely fell into the category of one who could have shifted some expenses around.
Get some quotes – you might be surprised. A study by LIMRA and LIFE (the organization that sponsors Life Insurance Awareness Month) found that consumers overestimate the cost of life insurance by as much as three-fold.