Today is National Insurance Awareness Day. It is a great time for people to review all their insurance needs, including their life insurance coverage. LIMRA’s Life Insurance Needs Model suggests that most households need 5.25 years of income replacement. LIMRA research shows that U.S. households on average have just 3.0 years of income replacement through their life insurance.
The average amount of life insurance owned and the average household income replacement ratio has decreased over the past 12 years leaving many households uninsured. Of the approximate 125 million U.S. households,1 about 37.5 million currently own no life insurance coverage.
According to LIMRA’s 2016 Life Insurance Ownership Study, the US household ownership rate has dropped from 83 percent in 1960 to 70 percent in 2016. Even though the total number of households owning life insurance grew from 43.8 million to 87.2 million. This shows that the number of U.S. households owning life insurance isn’t growing as quickly as the total number of U.S. households.
People give many reasons for not owning life insurance or not having enough life insurance. Seventy-one percent say they have other financial priorities above life insurance. Sixty percent say they can’t afford it. However, previous research shows consumers overestimate the price. For example, when asked how much a $250k term life policy would cost a healthy 30-year-old the median estimate given was $500—more than three times the actual cost.2 And 46 percent admit they just haven’t gotten around to it yet.
Insurance awareness day is a great opportunity to help your clients assess their risk and help them get the insurance they need to help them be more financially secure.
1 U.S. Census Bureau Source: 2010-2014 American Community Survey 5-Year Estimates
2 2017 Insurance Barometer Study, LIMRA and Life Happens (2017)