WINDSOR, Conn., April 6 /PRNewswire/ -- In a broad survey of American
households, nearly half said they believe they need more life insurance and
more than one-quarter said they actually expect to purchase more in the coming
year -- a decision that would add trillions of dollars of coverage to the
amount already in force.
Research and consulting association LIMRA International presented these
findings at the annual Life Insurance Conference in San Antonio, Texas. The
information came from a 2004 survey of two groups of consumers, those who own
life insurance and others who actually bought life insurance in 2003.
LIMRA reported that 44 percent of U.S. households said they need more life
insurance and 27 percent of households said they expect to buy life insurance
in the coming year, although no one can predict how many will actually buy. If
all 27 percent did, it would increase total coverage by $4.8 trillion and add
an estimated $9 billion to industry revenues, almost double the amount of new
premium now written each year.
"These findings show us some important trends about consumers and life
insurance," said Robert A. Kerzner, president and CEO of LIMRA International.
"They also reveal a wide gap between the amount of insurance that households
own and the amount they feel they need for adequate financial protection. The
life industry has a clear obligation and opportunity to try to fill this unmet
need, but we have to do a better job of reaching consumers."
The surveys revealed several trends:
* The 30-year decline in household ownership of individual life insurance
coverage has ended. Fifty percent of the households surveyed owned some
individual life insurance, the same as in the last survey in 1998, but
still far less than the 72 percent recorded in 1960. Twenty-two percent
of households have no life insurance.
* Ownership of group life insurance, provided chiefly through employers,
has held steady at 52 percent of households, the same as in 1998.
However, the number of individual workers with life insurance benefits
has declined from 56 percent in 1999 to 48 percent today.
* Term and whole life insurance lead in policy sales, accounting for 80
percent of the policies sold. In the 2004 survey of individual life
sales, term accounted for 43 percent of policies sold and whole life 37
percent. Individually insured households owning only term insurance
increased from 20 percent in 1992 to 36 percent today. Those owning
only permanent insurance decreased from 58 percent to 41 percent.
* Product guarantees are most important to consumers. Fixed premium,
guaranteed death benefit and lifetime coverage are the most important
policy features consumers cited.
Sixty-six percent of those surveyed said replacing the lost income of a
deceased wage-earner was their reason for buying life insurance. Forty-two
percent cited burial expense and 33 percent cited paying off a mortgage.
Seventy-five percent of households agreed that life insurance is the best form
of family financial protection against premature death of a primary wage-
earner.
On the other hand, those surveyed cited many reasons for not buying
additional life insurance, including cost (74 percent), difficulty deciding
how much to buy (52 percent), procrastination (50 percent), worry about making
the wrong decision (43 percent) and preferring to put money in other financial
products (40 percent).
An estimated 29 million households may be primed to buy more life
insurance in the coming year. The survey indicated that on average the
households who plan to buy more insurance in the next 12 months have enough to
replace 3.7 years of income but need 6.1 years of income replacement. On
average, those households need to buy an additional $163,000 of insurance to
meet that goal. Among other findings:
* The consumers most likely to buy life insurance in the next 12 months
are younger households (under age 45) and married households with
children.
* More than half of consumers said they would like to review their life
insurance needs at least every two years.
* Buyers say tax-free death benefits and cash value are important, but
many are not aware of the tax benefits.
* Consumers said, in choosing a company, familiarity and company
reputation are more important than a friend's recommendation or a
company's financial ratings.
About LIMRA International
LIMRA International is a worldwide association providing research,
consulting and other services to more than 800 insurance and financial
services companies in 60 countries. LIMRA was established in 1916 to help its
member companies maximize their marketing and distribution effectiveness.
Visit LIMRA International at http://www.limra.com.
LIMRA International seeks to send relevant news to journalists who cover
the life insurance and financial services industries. If you do not wish to
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