Study Finds Age and Income Gap

The industry is trying to figure out how to reach the middle market, according to Cottings.

But the economics, he continues, don’t work. And, according to Cottings, those who are not buying insurance are the “paycheck to paycheck folks who will find it hard to recover” if a breadwinner dies.

Insurers have not yet figured out how to “crack the code” and reach those of more modest incomes with personal service that is also economical for the company, he continues. And, these consumers need that personal “face-to-face” contact, he adds.

That need is reinforced when participants were asked whether they would purchase life insurance if Congress repealed the estate tax. The younger, lower income respondents said that they were more likely to buy insurance even if the tax goes away.

Of those who responded they were “very likely” to buy insurance, by age, the breakout was as follows: age 18-34, 32%; age 35-54, 30%; and age 55+, 10%. By income, the responses were as follows: under $25,000, 42%; $25,000-$50,000, 20%; and, $50,000+, 16%.

While the response to the question may be aspiration driven, it points to the fact that younger consumers are savvier about saving for retirement, Cottings says.

The study found that younger consumers and those with more modest incomes say that they would be more likely to save and invest more if the estate tax is repealed.

Of those who said that they were “very likely” to do so, by age, results were: age 18-34, 39%; age 35-54, 29%; and age 55+, 19%. By income, the responses were: under $25,000, 33%; $25,000-$50,000, 29%; and, $50,000+, 28%.

The intended behavior is to save more, according to Cottings. But to test intended behavior with actual behavior, the question needs to be revisited at a later date, he continues. It is akin to the issue of buying term and investing the difference, Cottings says. The question there is ‘how many actually do it?’ he adds.

‘The paycheck to paycheck folks’ need insurers to reach them