LIMRA Study Finds Single Mothers Are More Likely to Own Life Insurance Than Women in General, But Are Apt to Be Underinsured
WINDSOR, Conn., Aug. 8, 2011 — A recent LIMRA study found that nearly two-thirds of working single mothers owned life insurance, higher than the ownership level for all women (57 percent) in the total population.
“We were surprised by the level of life insurance ownership among single mothers,” said Nilufer Ahmed, senior research director, LIMRA Markets Research. “However, of those who are insured, only a third felt that their families would be able to cover expenses well into the future should they die. With about 10 million U.S. single mothers with children under the age of 18 living with them; there is a significant opportunity for companies to help these families obtain adequate levels of life insurance.”
The idea that single mothers are likely young and never married is a myth. U.S. Census Bureau data indicate that more than 8 in 10 single mothers are at least 25 years old, and more than half have been previously married, with nearly all these marriages ending in divorce. In addition, while many do earn low incomes, a fourth earn incomes of at least $50,000 annually placing them solidly in the middle class.
According to the study, almost two-thirds of single mothers own some type of life insurance – 37 percent own individual life insurance, and 46 percent are covered by group life insurance. Among those single mothers who earned incomes of $50,000 or more, close to 9 in 10 own type of life insurance, with almost half owning individual life insurance.
Most of single mothers (7 in 10) believe that the fees involved in working with financial professionals are too high to be affordable. However, meeting face-to-face is by far the most preferred way to purchase life insurance for single mothers. In fact, of the single mothers with life insurance, 8 in 10 purchased their policies through face-to-face meetings with insurance agents or brokers, or with other financial professionals. No other purchase method comes close.
“Companies and financial professionals should provide some guidelines about the fees involved in meeting prospects face to face,” commented Ahmed. “It is highly probable that single mothers are overestimating these costs, and therefore are not even approaching financial advisors.”
LIMRA found that more than half of insured single mothers realize that they are underinsured and should have more coverage. However, only a fourth say they are likely to purchase additional life insurance in the next 12 months.
The most common reason why insured single mothers have not increased their life insurance coverage is that they have other financial priorities that reduce their discretionary income. These priorities include saving for their children’s college educations and paying down debt, which are similar to reasons given by the general population.
It is important that companies specifically indicate in their marketing and branding materials that they provide life insurance policies that are affordable for all levels of incomes. This will appeal to single mothers who have tight budgets, regardless of the incomes they earn.
LIMRA research suggests that financial professionals take some specific actions to engage single mothers:
- Offer to review the policy coverages of their clients and prospects. These policy reviews may result in single mothers buying additional coverage, or purchasing new policies with affordable premiums.
- Proactively offer financial planning to their clients. This can help customers prioritize their financial goals and manage their income (and debt) to achieve their most important goals. Single mothers may particularly appreciate this since even simple plans can bring some peace of mind.
- Make it easy for mothers to meet with them. For example, single mothers should feel welcome to bring their children to the office. In other words, financial professionals need to be sensitive to single mothers’ needs.
For more information, please contact LIMRA Public Relations.
LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com.