While most people would confess to the fact that life insurance is an important coverage to have, a recent study suggests that a number of people don't make it a priority to get this form of financial protection when they don't receive it through their workplace.
According to analysis from research and professional development organization LIMRA, less than half – 46 percent – of middle market consumers own an individual life insurance policy. For purposes of the study, "middle market" was defined as individuals at between 25 and 64 years of age, making an annual income of between $35,000 and $100,000.
This may help explain why many people don't feel like they're prepared to handle the fallout were someone to die in their family prematurely. At 51 percent, a majority of respondents said that they would not be able to absorb the financial effects of losing a loved one, to the point of having to make a significant change as a result, like finding a new job or taking on more responsibility within a family framework.
"More than half of consumers would not be able to absorb the financial effects of losing a loved one."
"Life insurance is the one product that can help families keep a roof over their heads, provide for basic living expenses and allow time to recover and heal from the loss of a loved one," said Robert Kerzner, CEO and president of LIMRA. "LIMRA's research shows that people do not fully understand the risks they take by not having adequate life insurance coverage."
Workplace often factors into consumers' life insurance ownership
However, a separate poll also performed by LIMRA indicates that among the people who do have life insurance, they often get it thanks to participating in a group life insurance program. The survey found that approximately three-quarters of workplace insurance customers are from Generation X or Y. Members of Generation X were born between 1965 and 1980, and Generation Y from the early 1980s to the start of the 21st century.
LIMRA's "Shopping for Life Insurance" report indicated that as a general rule, workplace life insurance owners tend to be single and purchase what their employer offers, without giving much effort into shopping around for another policy that might be better or more affordable.
"For workplace buyers, the search for life insurance frequently begins and ends at work," said Ron Neyer, assistant research director at LIMRA's distribution research center. "Many rely on their employers' expertise for carrier selection."
While group insurance is an option – which is typically provided to consumers via their employer – the coverage that's provided tends to be less comprehensive, according to insurance experts. Additionally, because it's offered by a workplace, plans may be canceled if the owner of a policy decides to leave the company to pursue another role.
Though an employer's plan may ultimately be the best option an individual has, it behooves them to look into other plan offerings, as there may be one that is more in line with what they need given their current life situation.