Study Shows That Owning Life Insurance Is Key in Protecting Wealth

Owning life insurance is an important step in protecting wealth, according Lincoln Financial Group’s recently released M.O.O.D. (Measuring Optimism, Outlook, and Direction) of America study.

“Clearly Americans see the importance of life insurance; yet, it’s often viewed as a longer term safety net, and therefore not always considered on the list of day-to-day financial priorities,” said Mark Konen, president, Insurance and Retirement Solutions, Lincoln Financial Group.

“But the reality is, life insurance is an important component of a sound financial plan as it can help people achieve specific financial goals for today or tomorrow. With September designated as Life Insurance Awareness Month, now is an excellent time for consumers to speak with a financial professional or workplace benefits representative to better understand their life insurance needs and options and to help find budgeting balance between immediate necessities and financial security.”

The survey finds that 74 percent of Americans believe life insurance coverage is an important step toward protecting wealth. It also indicates life insurance owners are significantly more likely than non-owners (75% vs. 64%) to feel “in control,” a mindset that combines how comfortable respondents feel about their overall life, personal/family life, health and financial future.

Despite these sentiments of confidence and empowerment, the survey reveals that only 49 percent of Americans actually own life insurance. Of those who do own it, 51 percent purchased it through an agent/advisor, 32 percent through their work, and 17 percent got it through both.

A separate study recently conducted by Lincoln, “The American Consumer study,” indicates that ownership levels may be due to the way consumers prioritize their spending, and their perceptions around the benefits of life insurance. The study found that consumers spend only one percent of their monthly household budget on life insurance, while spending nearly 3.5 times as much on entertainment and restaurants. Understandably, nearly 50 percent goes to what are considered to be immediate needs, such as housing and transportation.

Adding to this discrepancy is that only 35 percent of consumers believe life insurance provides immediate benefits even though it can help individuals, families and businesses in many different ways. Life insurance proceeds can be used to pay immediate expenses or bills, support a family’s lifestyle, continue a business or leave a legacy, while some policies also provide “living benefits,” such as supplemental income for things like college tuition and retirement, or coverage for chronic illness or long-term-care expenses.

Younger groups need more coverage

Nearly one-third of Americans believe they should be putting more money into life insurance. This is particularly evident among younger generations who may need financial protection as they approach milestones such as marriage, buying a home, having a child or opening a business. The survey finds that 41 percent of Millennials (ages 18-35) and 37 percent of Gen Xers (36-48) think they should be putting more money towards life insurance.

While there is a need for additional awareness regarding the immediate benefits offered by life insurance, the majority of people (63%) believe life insurance delivers peace of mind and provides long-term or future benefits, according to the American Consumer study.

Read more information on the M.O.O.D. of America, including supporting documentation for the findings.

Results of the 2015 M.O.O.D. of America poll are based on a national survey conducted by Whitman Insight Strategies on behalf of Lincoln Financial Group from March 31 to April 9, 2015, among 2,273 adults 18 and older across the United States.

Results of the American Consumer Study are based on an online survey of 2,515 adults 18 years of age or older across the United States, conducted in early 2015 by Lincoln Financial Group and Penn Shoen Berland.

Ayo Mseka
Editor-in-Chief