Study Finds Financial Insecurity Across Generations

If you have clients or prospects who cringe at the thought of discussing their life insurance needs, and instead want to talk only about putting together a bullet-proof financial plan, you may be interested in the findings from a new joint study by LIMRA and Life Happens.

In a recent news release, the nonprofit industry trade associations shared some of the findings from the 2022 Insurance Barometer Study, which they conducted jointly. A key takeaway of this year’s survey is that two in five parents say that they are barely or not at all financially secure. This is an issue that is growing increasingly more critical, as most households haven’t prepared for the loss of a primary wage earner. In fact, the study reports that 44% say it would take less than six months to feel financial hardship if this happened to their family.

The associations frame this issue as “financial insecurity,” and they note that financial insecurity cuts across the generations. The report indicates that it is highest among Gen X (49%), followed by Millennials (44%), Gen Z (42%), and Baby Boomers (33%).

As most readers will know, but too many clients and prospects don’t, the way to ease these concerns is through life insurance. The study bears this out, as two-thirds (68%) of life insurance owners report feeling financially secure compared with only 47% of non-owners. The respondents who say they feel most secure are those people who have life insurance both through the workplace and through individual coverage (78%).

“Life insurance is the foundation of any strong financial plan, and our results show it provides people with a sense of security that many are looking for, especially after the last two years,” said Faisa Stafford, LUTCF, president and CEO of Life Happens. “The lasting impact of COVID remains at the forefront for many, with the pandemic leading almost a third, or 31% of people, to say they are more likely to buy life insurance in 2022.”

The need gap for life insurance − which the report describes as what people have versus what they say they need − is at an all-time high (18 points), which is more than double what it was twelve years ago. For the sixth consecutive year, the percentage of uninsured women has increased. Only 46% of women report owning life insurance, compared with 53% of men. A greater proportion of women than men, however, recognize that they need − or need more – life insurance coverage (44% versus 38%).

Despite their acknowledged need, just over one third of uninsured women (36%) report that they plan to buy life insurance in the next year. The various reasons women give for not having coverage include the following:

  • It’s too expensive − 39%.
  • I have other financial priorities right now − 37%.
  • I’m not sure how much or what type to buy − 22%.

“There are still over 100 million people in this country who don’t own enough life insurance” said David Levenson, president and CEO of LIMRA and LOMA. “And, while new policy growth jumped last year to the highest levels since 1983, there is still a lot that our industry can do to ensure that families are properly protected.”

Charles K. Hirsch, CLU, is the president of Hirsch Communications Consulting, LLC, a communications consulting operation in Florissant, MO. For many years, Chuck was the editor and publisher of Life Insurance Selling magazine and has published several of the leading life insurance industry magazines. He continues to contribute articles on a regular basis to industry publications, in addition to providing a wide range of writing, editing, content development, and marketing services through his firm. He is a regular contributor to NAILBA Now e-Newsletter as well as to Perspectives magazine.