Just about everyone who is part of some type of family unit is not, by life insurance industry standards, adequately protected by their current level of life insurance.
In fact, on average, consumers are about $1.2 million short, according to Nationwide Financial.
Given that life insurance has been sold for decades, this is a sobering discovery. But it does leave open opportunity for brokers, agents and advisors selling life insurance policies.
The life insurance gap was identified in a new poll of 1,100 people between the ages of 24 and 66 by the Columbus, Ohio-based insurer. All of the people polled were married or had a life partner; some had dependents and none were retired. Household incomes were $24,000 and up.
Nationwide defines full life insurance protection as having enough coverage to replace one’s income upon death. By this measure, only 2 percent of respondents were fully insured.
“The average consumer surveyed will earn roughly $1.5 million before they retire and holds about $300,000 in life insurance coverage, leaving them about $1.2 million short of replacing their income with life insurance,” Nationwide said in a release.
That’s a disaster waiting to happen, said Eric Henderson, senior vice president of life insurance and annuities for Nationwide Financial.
“Many Americans have the false perception that they have an adequate life insurance plan in place,” Henderson said. “When they actually do the math, the true picture may become clearer, and hopefully motivate action.”
The survey reported that just 29 percent of respondents believe they can afford enough life insurance to replace their household income. However, most consumers think it costs a lot more to buy full insurance coverage that it actually does, Nationwide said.