Time is having the expected effect on U.S. consumers’ life insurance coverage gap: increasing the size of the coverage gap for maturing Millennials — and narrowing the gap for members of the Generation X and Baby Boom generations.
New York Life Insurance Company sized up consumers’ coverage needs by surveying U.S. adults with spouses or financial dependents, and with an annual household income of at least $50,000. The company also commissioned a similar survey in 2013.
The median life insurance gap for Millennials increased to 78% of $452,000 in self-reported coverage needs this year, from a median gap of 65% of in 2013.
The typical Millennial has just $100,000 in life insurance coverage and faces a $352,000 coverage gap.
(Related: Coverage Gap Among Gen Xers Has Widened)
For members of Generation X, the median gap fell to 48% of $525,000 in coverage needs, from 63% five years ago.
For Baby Boomers, the median gap fell to 37% of $300,000 in coverage needs, from 57%.
Survey Nuts and Bolts
New York Life hired outside firms to conduct both surveys, through online survey systems.
The 2018 survey team created a sample of 1,738 adults ages 25 through 70. The 2013 survey team took in responses from 1,004 adults ages 25 and older.
For both surveys, New York Life used the Pew Center’s generation definitions.
The Pew Center classifies consumers as follows:
- The Greatest Generation: Born from 1901 through 1927.
- Silent Generation: Born from 1928 through 1945.
- Baby Boomers: Born from 1946 through 1964.
- Generation X: Born from 1965 through 1980.
- Millennials: Born from 1981 through 1996.
- Generation Z: Born from 1997 and onward.
People often buy life insurance to provide death benefits for spouses, children and other dependents.
People also may buy life insurance partly because they want to create a safe, long-lasting savings vehicle, to pay for college expenses, retirement expenses, long-term care needs or other needs.
When New York Life conducted its survey, it asked about the participants’ living benefits needs as well as their death benefit needs.
— Read New York Life Prices Coverage Gap, on ThinkAdvisor.