Americans worry about providing for their families in the event of their death, but most are unaware of many of the benefits life insurance can provide, according to a new survey from Edward Jones, a financial services firm, and Life Happens, a nonprofit consumer education group.
In the same survey, a quarter of survey respondents said their biggest concern was leaving financial burdens on loved ones if they suddenly became unable to work or died tomorrow. Yet only 41% said they had an individual life insurance policy, and 32% said life insurance was a low or nonexistent priority in starting a family.
“Protecting your assets and aspirations is a critical part of a comprehensive financial strategy,” Ken Cella, principal of the client strategies group at Edward Jones, said in a statement.
The survey was conducted by Engine’s Online Caravan Omnibus in mid-December among a national sample comprising 1,004 men and 1,004 women 18 and older.
Although Americans generally understand that having emergency funds to cover unexpected financial expenses in the short term is important, many families have not thought about longer-term protection, according to the researchers.
“Having emergency savings is critical in a pinch, but it’s not a long-term financial solution, especially if a family’s primary breadwinner were to die,” Life Happens president Faisa Stafford said in the statement. “That’s where life insurance comes in. And the good news is, it’s an affordable option for most.”
People shy away from buying individual insurance policies for a variety of reasons, sometimes deterred by misconceptions, but the most detrimental to their long-term financial goals is not understanding how life insurance can fit their needs, the survey results showed.
Presented with a list of expenses that life insurance can cover — including funeral costs, retirement income, estate considerations, estate taxes, charitable donations and education costs — 23% of respondents could not identify any of these options. Sixty-seven percent of those who were able to identify potential uses of life insurance benefits cited funeral costs, 28% retirement income and 26% estate considerations.
Only a quarter of respondents with children in their households were aware of life insurance’s value for estate considerations, highlighting the lack of awareness of life insurance as an estate considerations tool, the report said.
The survey identified a shift for where Americans buy life insurance. Forty-three percent of respondents said they would buy policies from insurance companies, followed by 33% who said independent agents/brokers and 21% who cited financial advisors.
Millennials were likelier than Gen Xers or baby boomers to say they would buy life insurance from their financial advisors. “Choosing the right type and amount of life insurance can be demystified by working with a financial advisor who understands what’s most important to you, your family, your financial situation today, and your goals for the future,” Cella said.
The financial advisor, he noted, is the one person who better than anyone else understands clients’ financial goals and how to help protect them.