Are Life Policyholders Missing the Point?
Poll results reveal that majority of Americans connect life insurance to feelings of security, yet dont fully understand how such a vehicle can help meet long-term financial goals.
Insurance Networking News, September 4, 2012
A new poll released today revealed that Americans feel 'extremely secure' when they take steps to protect themselves against financial risk, yet those same individuals are missing the opportunity to use life insurance to meet broader long-term financial goals such as education funding, longevity planning, charitable giving and other uses.
Conducted by Northwestern Mutual, Milwaukee, the poll, which was released in conjunction with “Life Insurance Awareness Month,” noted that more than two out of three people say that owning auto, health, homeowners/renters and/or life insurance makes them feel 'secure.'
The survey, which was conducted online by Harris Interactive on behalf of Northwestern Mutual from August 10-14, 2012 among 2,097 American adults ages 18 and older, noted the following results:
* Individuals who purchased life insurance  are most often prompted to do so as a result of marriage (32 percent), retirement planning (25 percent) or the birth of a child (22 percent).
* Among all of the respondents, 30 percent say they get the greatest peace of mind 'knowing that their family will be provided for in the event of unexpected death' and also 'knowing that all debts would be paid.'
* People are not always fully leveraging the financial security of life insurance. When asked about the expenses they would consider in determining the amount of life insurance needed, few people who do not have life insurance factored in education (15 percent) or childcare (11 percent) expenses, and a third of people weren't certain what expenses they would need to cover at all.
* Further analysis of the polling responses revealed that consumers may be overlooking the potential uses of life insurance. For example, 52 percent of people in the Northwestern poll who purchased life insurance say they were motivated to purchase it in order to provide for loved ones, but only six percent were motivated to purchase a life insurance policy to fund an inheritance for heirs or charities/non-profit organizations.
David Simbro, senior vice president, Northwestern Mutual, says “a lot of people assume that life insurance is a basic inflexible product,” yet have both living and death benefits. According to Simbro, a better understanding of life insurance benefits means taking a dual approach—looking at a person’s long-term financial situation as one part building savings and assets, and one part protecting those savings and assets. “Taking this dual approach is what allows these individuals to feel confident about their financial security,” he says.
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