Life Insurance Ownership at a 50-Year Low

November 9, 2010

The poor economy has led Americans to cut corners on their life insurance—at levels not seen in half a century, according to a new study.

Only 44% of U.S. households have individual life insurance, according to the latest Trends in Life Insurance Ownership, a study conducted every six years by Limra, the investment research company.

That represents a 50-year low in U.S. life insurance ownership, according to the study, and means there are 11 million fewer households with life insurance than there were six years ago.

That little snippet was taken from this short article one of my friends posted on facebook this morning.

The article went on to state that people aren’t focusing on life insurance because they are have other financial priorities like retirement planning. This is sad when you figure that a $500,000 term insurance policy can be had for $20 to $30 per month. Who can’t afford that?

11 responses to Life Insurance Ownership at a 50-Year Low

  1. When finances are tight you have to make difficult decisions. I wonder it the aging population may also have some influence. Life insurance makes the most sense when you are raising a family – if something happens to you, you want the kids educations and well being taken care of. As we baby boomers age, our kids have graduated and are out on their own and so the need for life insurance decreases.

  2. LoveBeingRetired,

    Good point.

  3. I just don’t understand it. Even when I was drowning in debt, making $13,000/yr with a house payment and a car payment (never late on either btw) I always maintained life insurance.

    If you’ve ever known someone who’s spouse or child died without it, you’ll never go without life insurance ever again.

    It costs money to bury someone ($7,000 to $10,000) and settle those final expenses (medical and other debts) and thought the funeral home may appear compassionate, they don’t do handle anyone for free … even children.

  4. Wow, typos. That’s what I get for going too fast.

  5. I’m a little confused as to the term “individual life insurance.” Do they mean an individual policy outside of one’s workplace? I have life insurance through my employer benefits so it’s not clear to me if I’m in that 44% or not.

  6. Not trying to start an argument, but if you live close to the poverty line, then Social Security is all you likely need. As with most forms of insurance, the more you earn (or the more you need to protect) the more insurance you need.

    83% of the population makes less than the social security cap, so based on these numbers there is a fair amount of people who earn less than the cap and are buying ‘extra’ life insurance.

    The question I ask is: why should you purchase more life-insurance, especially people who make less than the SS cap?

  7. BG: Who’s going to pay for your funeral expenses?
    That’s why everyone should have life insurance (no I don’t believe in insuring children…I’m just talking adults.) At least acquire enough to pay to dispose your carcass in the manner you’d desire. :)

  8. Stacey) I have enough saving to pay for funeral expenses out of pocket. Likely will do that as I do everything in life: CHEAP! cremation and put the dust in an old milk carton or something.


  9. Or just compost the garden w/you. :)

  10. The death benefit for a funeral that SS pays out is only $250. That is not nearly enough to get buried or cremated in even the cheapest manner.

    If you have kids under 18, there is a SS benefit for your wife and kids based on how much you made. The benefit only extends to two people though, so if you had three kids + wife, you’d only get benefits for 1 kid + wife. The benefit is really not enough for them to live on.

  11. #10 sm) good point. You got me studying the website and didn’t realize that the surviving spouse doesn’t get anything, unless you have kids or she is too old to spend it — I figured the surviving spouse got something regardless of her age if the bread-winner dies.

    You guys have convinced me, I’ll buy a policy for my wife’s benefit.

    Stacey) I need to check my HOA charter to see if there is something preventing me being used as compost like you recommend. I guess I should stay out of the easements just in case a phone line gets cut — don’t want some AT&T worker disturbing my ‘sleep’.