Over the past 20 years in the United States, sales of life insurance policies have steadily declined. The market picked up some steam after 9/11 with a 3 percent boost only to go flat by 2006, and then start back down in 2007.
Are Americans getting more fatalistic, preferring to limit their worries and their money to the here and now? Maybe, but those who are protected by a policy are covered at higher pay-out levels than ever before. During the same 20 years, the value of individual policies climbed steadily, and now averages about $256,000. Husbands are generally insured for more than $235,000; wives only $147,800.
Interestingly, however, the wives are more likely to be the partner with the coverage: 28 percent compared to just 15 percent for the guys. In at least 6 million households, neither spouse is covered. Statistically, those same families tend to have children under the age of 18. Twenty-five percent of families with dependent children say they wouldn’t be able to meet their living expenses if the primary wage earner died.
An Under-Insured Nation
Americans simply do not carry adequate life insurance coverage to provide for their families in the event of the death of one or both parents. Experts recommend a policy value sufficient to supply 7 to 10 years of lost income. That means both husbands and wives would have to double their current level of protection to meet the suggested standard. Yet, 56 percent of married couples with life insurance policies think their protection is adequate. Only 44 percent of households even carry individual life insurance, a figure which is not just a 20-year, but a 50-year low.
The recession which began in 2009 has deeply affected these already troubling numbers. In 2009, about 9.4 million individual life insurance policies were sold in the United States, a million fewer than in 2004. Last year, 44 percent of Americans surveyed said they could not consider purchasing life insurance because they had pressing financial concerns. The perception seems to be that life insurance payouts primarily go to address funeral and burial costs only.
In the next 12 months one in four households say one adult might buy life coverage, but given the continued rough economy, it’s highly unlikely that will happen. In fact, industry experts predict a continued downward trend.
These numbers are both interesting and revealing. Although women are more often insured, they are protected for a far lesser amount than their husbands. Overall, coverage levels are inadequate to provide income for the family, and the purpose of having life insurance is poorly understood. Affordable life insurance is a reality if consumers educate themselves and work the premiums into their budget plans. Rather than cutting back on this important protection during hard times, your family’s future security could well depend on this increasingly neglected form of coverage.