American families are reporting an increased desire for financial protection in these times of economic crisis, but do not have the proper financial strategy in place to fund their families’ future, according to a new survey of 1,105 respondents from New York Life Insurance Company and Ipsos Research.
According to the survey, released on Sept. 23, 83% of Americans age 30 and older agree that the economic crisis has increased their desire to provide financial protection for their family. Adults aged 30 to 49 (88%) and parents with children under 18 (88%) are particularly likely to have this desire.
While more than 8 in 10 adults age 30 and older report an increased desire to protect their families’ financial future, more than half of those surveyed would rely on their retirement savings, borrowing from family or getting another job if faced with financial hardship as the result of the loss of a breadwinner. Only about one-third identified life insurance as the answer to meet their financial needs in these circumstances.
“The economic crisis has been a wake-up call for families and most are seriously concerned about protecting their loved ones, yet many still lack a secure plan to do so,” said Mark Pfaff, executive vice president of U.S. Life and Agency, New York Life. “The solutions that many Americans would turn to in a crisis, including depleting retirement savings and taking an additional job, would require painful and difficult choices with serious repercussions for the family. These findings show that there is more work to be done to educate families about how life insurance helps to provide peace of mind and future financial well-being for loved ones.”
When asked what would primarily fund the family’s future financial goals if something were to happen to the breadwinner, nearly a quarter said that they would take an additional job (22%) or draw down their retirement savings (22%). Another 7% said they would seek the help of family and friends, and 1% even said they would hope to win the lottery. Only 32% of Americans said that they would primarily rely on life insurance to help finance their families’ future. One in six (16%) wouldn’t look to any of these options as the main source of funding for their family’s financial goals.
“The survey findings are compelling because for over a year now Americans have been coping with increasing unemployment and dizzying stock market fluctuations, but this hasn’t deterred consumers from a fundamental belief in protecting their families. In fact, it seems to have heightened their focus on creating financial security for their family,” said Nicolas Boyon, senior vice president with Ipsos Public Affairs, who conducted the study.
“It is very clear to us that families are feeling financially unstable, and we believe that times like these draw even more attention to the negative financial situation that would be compounded by the loss of a breadwinner and bring to the forefront the need for life insurance,” Pfaff said. “These findings come at an important time of year – September, which is Life Insurance Awareness Month, when the industry is increasing efforts to communicate the value of life insurance.”
“One of the messages we believe is critical to communicate is that in addition to the guaranteed1 death benefit permanent life insurance provides, there are unique living benefits, including the policy’s cash value, that may be especially useful today. If a financial need arises, many people turn to their bank for a loan. However, our policyholders, instead of applying for a loan at the bank, can use the cash value in their policies, which grows tax deferred, as their own personal savings bank. They can borrow against it for obligations like making a mortgage payment, funding college education, or for long term care health needs.2 These guaranteed3 living benefits make permanent life insurance even more important to families and businesses in the current environment where there is an increased desire for a stable, dependable way to protect loved ones,” Pfaff said.
Industry statistics report that 68 million adult Americans have no life insurance and those with insurance have considerably less than most experts recommend – only four times their annual income in coverage.
These are the results of an Ipsos poll conducted Aug. 24-27, 2009. For the survey, a national sample of 925 adults aged 30 and older from Ipsos’ U.S. online panel were interviewed online. Weighting was then employed to balance demographics and ensure that the sample’s composition reflects that of the U.S. adult population according to Census data and to provide results intended to approximate the sample universe. A survey with an unweighted probability sample of 925 and a 100% response rate would have an estimated margin of error of +/- 3.2 percentage points 19 times out of 20 of what the results would have been had the entire adult population aged 30 and older in the United States had been polled.
1. Guarantee is based on the claims paying ability of the issuer.
2. A policy’s cash value may be accessed via policy loans and/or partial surrenders. Policy loans accrue interest at the current rate. Loans and partial surrenders reduce the death benefit and cash value by the outstanding loan plus interest or the amount of the partial surrender. If a decision is made to purchase, please see the contract for complete terms and conditions.
3. Guarantee is based on the claims paying ability of the issuer.