LIFE Foundation Survey Examines the Role Life Insurance Plays in
Safeguarding a College-Funding Plan
NEW YORK, Sept. 20 /PRNewswire/ -- Asked to assess the impact the death
of the primary wage earner would have on their children's college plans,
parents overwhelmingly said that their children would have to alter their
plans, with repercussions ranging from taking out additional loans to being
unable to afford college altogether.
The survey found that the stakes are dramatically higher for parents
that have either no life insurance or little coverage. For instance, more
than three in four (76 percent) parents with no life insurance coverage say
that the death of the primary wage earner in their household would either
make it harder to afford college (40 percent) or college would be
completely unaffordable (36 percent).
By contrast, parents with life insurance coverage equal to at least
five times their annual income are confident that their children would get
a college education, even in the event of their premature death. Of this
group, 84 percent say college would be just as affordable or easier to
afford if they were to die prematurely, presumably because life insurance
proceeds would be used to pre-fund their children's college education. Only
12 percent of this group say that the primary wage earner's death would
make college harder to afford and just 1 percent say the loss would make
college completely unaffordable.
Insurance professional Mark D. Johnson, CLU, ChFC, RHU, chairman of the
Life and Health Insurance Foundation for Education (LIFE), which sponsored
the survey, says these findings highlight the financial risk many parents
take by not having adequate life insurance coverage.
"The ability to afford a college education is not something that moms
and dads should be leaving to chance, and unfortunately that's what so many
parents are doing by not having adequate life insurance coverage," said
Johnson.
Skating on Thin Financial Ice
The survey results were released in conjunction with "Skating on Thin
Financial Ice", a Life Insurance Awareness Month event held yesterday in
New York City and sponsored by the LIFE Foundation. At the event, Scott
Hamilton, Olympic Gold Medalist and spokesman for Life Insurance Awareness
Month, spoke about his own experience of losing his mother to cancer when
he was 19. Because his mother did not own any life insurance, a lack of
funds almost forced Scott to give up skating just as his career was
starting to take off. He was only able to continue his training due to the
generosity of an anonymous donor who saw promise in his skating ability.
"It's sad to think that the college plans of so many children would be
threatened if they lost their parents," said Hamilton. "It makes me
appreciate the security that my own life insurance protection provides my
family. I was lucky, and I got to pursue my dreams even when it seemed I
would never be able to afford to. But I don't rely on luck with my own
family's financial security and neither should any mom or dad."
Also speaking at the event was Jermaine Suggs, 23, who had to drop out
of the University of West Alabama three years ago when his father died with
no life insurance. For three years, Suggs set aside his dream of a college
education to help support his family. Just last month, Suggs resumed his
education at Concordia College in Selma, Ala., thanks in part to a $5,000
scholarship he received from the LIFE Foundation as one of the 2006
recipients of the organization's LIFE Lessons Scholarship Program.
"My father had life insurance but dropped it because his business was
struggling and he felt he needed the $9 a month he was spending on the
coverage," said Suggs. "That insurance would have made such a huge
difference for me and my family. People need to realize that you don't buy
life insurance for yourself, you buy it for those that are left behind."
Additional Survey Findings
Conducted by KRC Research between August 31 and September 10, 2006, the
random national telephone survey asked 541 Americans with children under
the age of 18 to consider the likelihood their children would go to
college, their financial preparedness to cover the costs, and the impact
the death of the primary wage earner would have on their child's college
plans. Here's how parents responded:
* 94 percent of parents say it is definite or likely that their children
will go to college
* 77 percent of parents expect to be fully or mostly responsible for
financing their children's education
* Just 14 percent of parents say their family is well prepared to pay for
their child's college education
-- 44 percent are doing okay, but need to continue saving steadily
-- 22 percent are behind in saving
-- 18 percent are totally unprepared
* When asked which of the following scenarios regarding their children's
college plans would likely occur if the primary wage earner died
tomorrow, parents with and without insurance answered very differently
(Multiple responses permitted):
Parents Parents Parents with
without any with any five times or
life amount of more their
insurance life annual income
coverage insurance in life
coverage insurance
coverage
Children would have to 65 % 42 % 21 %
take out additional
loans to pay for
college
Children would have to 51 % 34 % 17 %
modify their plans and
attend a less expensive
institution
Children would take 62 % 30 % 12 %
longer to complete
college because they
would have to work to
help pay for it
Children would not be 34 % 10 % 5 %
able to afford to go to
college
Among adults with children under 18 at home, 68 percent report having
life insurance, 13 percent do not and 19 percent did not provide an answer.
In addition, 42 percent report having life insurance coverage worth four
times their annual income or less, 21 percent have coverage five times or
more their annual income and five percent were not sure of the amount of
their life insurance coverage.
About LIFE
The Life and Health Insurance Foundation for Education (LIFE) was
founded in 1994 in response to the public's growing need for information
and education on life, health, disability and long-term care insurance.
LIFE also seeks to remind people of the important role insurance
professionals perform in helping families and businesses safeguard their
financial futures. To learn more about these topics, please visit
http://www.life-line.org.
About Life Insurance Awareness Month
Life Insurance Awareness Month was created in response to growing
concern about the large number of Americans who lack adequate life
insurance protection. According to LIMRA International, 68 million adult
Americans have no life insurance. Those who own life insurance have an
average of four times their annual income in coverage, which is
considerably less than most experts recommend. Held each September, Life
Insurance Awareness Month is an industry- wide effort that is coordinated
by the LIFE Foundation.
CONTACT: Brooke Parker
212-445-8142
-or-
Jason Adler
212-445-8245
SOURCE The Life and Health Insurance Foundation for Education
(LIFE)
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Related links:
http://www.life-line.org
CONTACT:
Brooke Parker, +1-212-445-8142, or Jason
Adler, +1-212-445-8245, both for The Life and Health Insurance
Foundation for Education
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