Thank you for your interest in WorldatWork articles and publications. To order full copies of WorldatWork publications, please contact WorldatWork Customer Relationship Services or call 877-951-9191 (United States and Canada) or +1 480-922-2020 (other countries).
There are many reasons why purchasing life insurance is a good idea. However, a large portion of Americans don’t have a policy.
Employee benefits provider Unum found that 40% of the 1,000 adults it surveyed in the United States said they don’t have or don’t know if they have a life insurance policy to financially protect their loved ones.
The same study highlighted additional financial exposure and anxiety, including:
- 35% said thinking about what would happen to their family should they die unexpectedly was a top cause of anxiety; only going to the dentist rated higher (40%).
- If the family’s primary wage-earner were to die unexpectedly, 32% of those in their prime working years (25-64) would feel the financial impact within a month.
- 34% think they need just one or two times their annual salary in life insurance to financially protect their family.
According to life insurance industry group, LIMRA, nearly half of U.S. households are underinsured, with an average coverage gap of $200,000. Additionally, the group recommends an individual have 7x to 10x their salary in life insurance.
“While it’s not surprising that so many adults aren’t confident in their financial planning abilities, it’s concerning that such a large percentage are leaving their families financially unprotected,” said Laura Adams, a personal finance expert. “For most people, their ability to earn an income throughout their life is the biggest asset they have, and term life insurance is a relatively inexpensive way to protect that asset until they retire, or their family financial obligations decrease.”
Of survey respondents working full-time, 46% purchase life insurance through their employer, most often during an open enrollment period in the fall. However, according to a separate survey by Unum of 1,512 working adults also conducted in August, 50% spend 30 minutes or less reviewing all their benefit options prior to enrolling.
The most important reason for having a life insurance policy is to financially protect loved ones. If they count on the primary wage-earner’s income or other financial resources, life insurance helps assure they’re covered if that individual passes away. It can also cover funeral expenses, pay off debt, pay estate taxes and for things like a child’s education, student loans or a home mortgage.