The Shocking Statistics Behind the Life Insurance Coverage Gap

bigstock-Chasm-24306836Most Americans don’t have enough life insurance. Many Americans have no life insurance at all. Why? According to research, the most common reason given is that they have competing financial priorities. The second most common reason? They think they can’t afford it.

Here, we take a look at the shocking numbers behind the coverage gap in America and some of the misconceptions that might be causing it to persist.

  • 85 percent of consumers agree that most people need life insurance, yet just 62 percent say they have it.

             Source: LIMRA’s Life Insurance Barometer Study 2013

  • 44 percent of U.S. households had individual life insurance as of 2010 — a 50-year low. In 1960, 72 percent of Americans owned individual life insurance. In 1992, 55 percent owned it.

             Source: LIMRA’s Trends in Life Insurance Ownership study

  • 40 percent of Americans who have life insurance coverage don’t think they have enough.

              Source: Genworth Lifejacket Study 2011

  • 70 percent of U.S. households with children under 18 would have trouble meeting everyday living expenses within a few months if a primary wage earner were to die today. 4 in 10 households with children under 18 say they would immediately have trouble meeting everyday living expenses.

             Source: LIMRA Household Trends in U.S. Life Insurance Ownership, 2010

  • $15.3 trillion: Estimated unmet life insurance need in the United States

             Source: LIMRA’s 2012 report “Closing the Insurance Gap”

Why aren’t people buying more coverage? Unfortunately, many Americans overestimate the cost of life insurance:

  • 70 percent of Americans failed a recent 10-question basic life insurance IQ test.

              Source: LIMRA

  • 75 million American families count on life insurers to protect their financial futures.

             Source: ACLI based on U.S. Census 2011

  • Life insurance products pay out an average of $1.5 billion every day in the U.S. By comparison, Social Security pays out an average of $1.9 billion per day.
  • 20 percent of Americans’ long-term savings are provided by life insurance, including annuities and permanent life insurance.

             Source: SecureFamily.org

  • $19.2 trillion: Total life insurance coverage in force in the U.S. at the end of 2011.
  • $75 billion: Approximate amount of annuity benefit payments paid to annuity owners in 2011.

              Source: ACLI 2012 Life Insurers Fact Book

  • $62 billion: Approximate amount life insurance companies provided in payments to beneficiaries of policyholders who died in 2011.
  • $75 billion: Approximate amount of annuity benefit payments paid to annuity owners in 2011.

             Source: ACLI 2012 Life Insurers Fact Book

  • $2.9 trillion: Amount of new life insurance coverage Americans purchased in 2011.
  • $162,000: Average size of new individual life policies purchased in 2011

              Source: ACLI 2012 Life Insurers Fact Book

Life insurance supports America:

  • 2.5 million U.S. jobs are directly supported by the life insurance industry

              Source: SecureFamily.org

  • Life insurers have $4.5 trillion invested in the U.S. economy, making the industry one of the largest sources of capital in the nation.
  • The life insurance industry is the No. 1 U.S. investor in corporate bonds, holding 18 percent of all U.S. corporate bonds.

             Source: The Heart of the Matter, LIMRA 2012

Life is good with life insurance:

  • 64 percent of life insurance owners think they have a better quality of life than the average American (vs. 51 percent of non-life insurance owners).
  • 92 percent of life insurance owners reported that having enough money to protect family against life’s uncertainties is important to living life as a good person (vs. 85 percent of non-life insurance owners).

             Source: New York Life’sKeep Good Going” report

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