With many U.S. households underinsured or holding no life insurance at all, the untapped market for life sales is enormous. In a recent study, LIMRA pegged the number at a staggering $17.5 trillion.
That’s almost double the figure LIMRA projected in a previous study in 2004. Back then, the organization estimated that if the 48 million underinsured households bought the amount of life insurance coverage they needed, life insurance sales would increase by as much as 9.5 trillion. Now, with life insurance ownership at an all-time low, that number has nearly doubled as half of U.S. households-a total of 58 million-indicate they need more life insurance coverage.
LIMRA based the size of the underinsured market on two measures: the number of households that admitted they are underinsured and those contemplating the purchase of life insurance over the next 12 months. From those two groups, LIMRA calculated the gap between the amount of life insurance these individuals think most consumers should own and what they actually own.
Breaking it down by generation, more Generation X households are thinking of buying life insurance in the next year than members of Generation Y and baby boomers. That logical, since three-quarters of Gen X households are married and half have a child under 18 at home-the prime market for life insurance sales.
Although the probability of buying life insurance does not vary by income level, the LIMRA study found that twice as many households bringing in between $35,000 and $99,900 (17 million) are more likely to buy life insurance than the more affluent.