One of the biggest challenges for the life insurance industry in recent years has been recovering from the recession and convincing the youngest generation of adults just how important their coverage is. The good news is that these efforts now seem to be paying off in earnest, as millions have taken on this kind of coverage over the course of the recent economic recovery. That's a trend that now seems quite likely to continue.
In all, about 5 million households nationwide have added life insurance since 2010, up 6 percent over the six-year period, according to the latest Trends in Life Insurance Ownership survey from LIMRA. And while nearly 1 in 3 households still don't have life insurance, that's on par with the all-time low observed in 2010. And when it comes to reaching younger adults, life insurers have been particularly successful.
Getting millennials and Gen X involved
Today, nearly half of all people under the age of 35 have some amount of individual life insurance, and ownership rates are rising fastest among couples under the age of 45 who have children, the report said. In addition, 87 million households nationwide say they have life insurance, and they're also more likely to buy it than they used to be.
Some issues do still linger, however, nearly half of all households still suffer from coverage gaps, where their insurance is not robust enough for their needs, the report said. The average size of these gaps is about $200,000. That replaces only about three years of household income, marking a slight decline from the 3.5 years observed in 2010.
"It is certainly good news that so many more families have some form of life insurance than did in 2010, and that the downward trend of overall life insurance ownership has stabilized," said Robert Kerzner, president and CEO at LIMRA. "However, more than 37 million American families are completely uninsured and at financial risk if their primary wage earner dies unexpectedly."
Reaching people who don't think they need coverage
One group that is often seen as not having enough life insurance these days is stay-at-home parents, according to a report from the consumer finance site Nerdwallet for the Huffington Post. While they don't actually earn a salary, the care they provide for their kids is extremely valuable, and replacing it in the event of an untimely death can cost tens of thousands of dollars annually, or more. In these cases, experts say, the size of the benefit doesn't have to be massive, and often term coverage is a low-cost option that can provide significant benefits for parents who stay home with their kids.
In general, the more life insurers can do to connect with consumers and explain to them why the coverage they're offering is so valuable, the better off both parties will be. Often, people just don't know enough about life insurance to make informed decisions, but a little education can go a long way toward securing their future financial well-being.