As the financial-services industry calculates opportunities in the middle market, a new LIMRA report finds middle-market households own the majority of individual permanent life insurance inforce. Once thought to be primarily bought by the affluent, households at all income levels own permanent life insurance, with the middle market leading the way at 57 percent.
The Facts of Life and Annuities:2015 Update notes that 70 percent of all U.S. households have some life insurance coverage, but half of U.S. households believe they need more. Among those with life insurance: 50 percent own only permanent life, while 32 percent have only term insurance. Eighteen percent own both permanent and term insurance.
A separate LIMRA study found nearly 7 in 10 U.S. workers have life insurance offered or available to them through their employers. Among those with access to group plans at work, 80 percent participate. While life insurance through the workplace is important coverage, it is often a term policy that ends when an employee leaves a job.
Lifetime coverage is a key feature of individual permanent life insurance and as long as required premiums are paid coverage is guaranteed to remain regardless of a person’s health. Consumers who own permanent life insurance also have the ability to build and access cash value with permanent policies.
Whether they own permanent or term life insurance, consumers rate income replacement as a key reason for having coverage. When asked why they own life insurance, covering lost wages and income is second only to paying burial expenses. Across all income groups, the average U.S. household that has life insurance owns enough to replace 3.5 years of income.
By contrast, half of U.S. households say they would feel the impact from the loss of a primary wage earner in a year or less. More than 40 percent say they would feel that impact within 6 months.
Americans overwhelmingly believe in the value of life insurance. LIMRA research finds a large majority of consumers agree that life insurance protects their families and is the responsible thing to do. Nine in ten say it provides peace of mind.