Do you currently have a life insurance policy? As a fee-only planner, I don’t sell insurance. However, I have met very few people who don’t need a policy. As we begin Life Insurance Awareness month, I want share with you seven disturbing statistics about life insurance ownership in the U.S.
1. U.S. households are at risk: 30% of U.S. households (35 million) have no life insurance protection.
2. 2009: Insurance companies issued 9.4 million individual life insurance policies in the U.S., one million fewer policies than they issued in 2004. Mid-1980s: insurance companies issued about twice as many policies compared to today.
3. Half of U.S. households (58 million) say they need more life insurance – the highest level ever.
4. One in four U.S. households rely solely on group life insurance to provide financial protection if a wage-earner dies. These households may lose their only life insurance coverage if they become unemployed or have their work hours reduced. (In the past year, 15% of U.S. households held someone who lost a job.)
5. One out of 4 households plans to purchase life insurance for a household member in the next 12 months. But many are unlikely to follow through.
6. 24 percent of households with children under 18 say they want to speak with a financial professional about their life insurance needs, but most will not proactively seek that assistance. (This group is arguably in the most need for life insurance, yet 11 million have no life insurance coverage.)
7. An estimated 1 in 4 middle-market households (annual incomes of $35,000 to $99,999) admit they don’t know how to attain their financial goals. 18% of them want to speak with a financial professional about life insurance.
Source: LIMRA’s 2010 Life Insurance Ownership Study
Many times after I complete an insurance analysis for a client and it’s time for them to purchase a policy, they will ask me, “Can we just buy the policy from you?” The answer is always, “Sorry, no.” I could go out and get my insurance license to sell insurance products, but then I wouldn’t be considered a “Fee-Only” advisor anymore since I’d be making a commission on the sale. The reason I want to remain fee-only is so that my clients know I am only recommending what’s truly in their best interest; I don’t benefit monetarily from them purchasing their insurance.
If you’d like more information on the different types of Life Insurance policies, click here.
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John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals. For more information, visit https://www.chladekwealth.com.