Life Insurance Coverage Overlooked by Middle-Aged Americans [AUDIO]
The economy is slowly regaining ground since the Great Recession, but many middle-aged Americans are overlooking life insurance as a result of their personal finances according to a new survey.
New York Life which finds Americans born from 1965 through 1976, commonly known as Generation X, reported life insurance needs nearly $449,000 greater than what their current coverage provides.
According to the survey, 20 percent of Generation Xers reported no life insurance coverage, up from just five percent who reported no coverage in a similar survey in 2008. A survey of 1,000 Americans between the ages of 37 to 48 reported coverage of $260,000 compared to a need of $708,996. That gap is up about 24 percent from a similar study in 2008 that showed a shortfall of about $363,000.
"Americans in general are underinsured. That's not a surprise. What came as a surprise was the magnitude of the gap and the fact that it has grown so dramatically since 2008," said Chris Blunt, president of the Insurance Group at New York Life. "The economy has been tough, people are scratching for every bit of discretionary income that they have, so there's a lot of competition on their dollars that they have to spend. People also fundamentally underestimate how much life insurance they need. On average, they've got half of what they need. There has also been a dramatic decline in the number of insurance professionals in the industry over the last ten years, so frankly, there's fewer people out there talking about this and working with GenXers on how to understand what their gap is and how to fill it."
Blunt said there is risk involved for those who opt not to have life insurance.
"If the average person needs somewhere between 7 and 10 times their annual income and they have somewhere between 3 and 5, the question is, 'what happens after year 4, what's going to magically happen where your spouse and kids won't need income anymore to support the family?'" said Blunt. "We often say if you can't afford to retire, you can't afford to die. It's not to be crude, it's a fact. Unless you're independently wealthy and you can stop working tomorrow. If you pass away, the paycheck goes away."
If you can't afford coverage that is ideal, something is always better than nothing. "I would encourage people to sit and talk to an insurance professional. Buy whatever you can afford. People often hear a number and worry, but the fact of the matter is something is better than nothing. It's a tough topic as no one likes to think about their own mortality. But, I would say definitely do whatever you can do," said Blunt.