A new LIMRA study found that 6 out of 10 Generation X and Y Americans say losing their income for 6 months due to accident or illness would have a significant or drastic impact on their families’ financial well-being.
“Our study revealed that younger generations were more likely to feel the financial impact of income loss more severely than Baby Boomers,” noted Nilufer Ahmed, senior research director, LIMRA Insurance Research. “The reaction was just as pronounced in the event of death of the primary wage-earner, where about 6 in 10 Gen X and Y consumers thought their households would be negatively affected compared with just over one third of Boomers.”
The study, “U.S. Consumers: The Generations,” examines the current financial situation of Baby Boomers, Generations X and Y, focusing on their financial concerns, goals, attitudes and behaviors. The results of the survey represent responses from more than 6000 consumers age 25-64 (with household incomes of $25,000 – $149,000) who were the financial decision makers of the household.
Not surprisingly, life insurance ownership improves with each older generation. The study shows that only two-thirds of Gen Y consumers have any kind of life insurance compared with three quarters of Gen X and Boomers. In addition, fewer Gen Y consumers own individual life insurance (34 percent) than Gen X consumers (45 percent). More than half of Baby Boomers report owning individual life insurance (52 percent).
However, more Gen Y consumers said they were likely to purchase life insurance within the next 12 months than Gen X and Boomers (see chart). While nearly half of Gen X and Y consumers said they would prefer to buy life insurance through face-to-face meetings with a financial professional, 1 in 4 Gen Y consumers and more than 1 in 5 Gen X consumers said they would prefer to purchase through their workplace. This has quadrupled from 2010, which at the time was around six percent.
The study found that about half of Gen X and Y consumers believe their need for professional advice has increased over the past few years. In particular, more than 7 in 10 Gen X and Y consumers expressed an interest in learning about savings options and strategies.
“Fewer than 1 in 5 Gen X and Y Americans have a defined benefit plan, meaning most will be solely responsible for funding their retirement,” noted Ahmed. “This study makes it clear that younger consumers recognize this and are interested in getting professional advice, which could help them with their top financial concern of saving enough for retirement.”