Insurance Gallery

2009 SEP 23
Even though it appears that the economy reflects a lag in life insurance sales, middle-class Americans are keeping their personal policies and in what appears to be an uncertain financial environment, they are preserving important protection.
In August, First Command Financial Services Inc., carried out a survey that reveals that only four percent of Americans indicate that they are making changes in their personal life insurance coverage because of economic pressures. Considering that portion of the survey that indicate making a change, 42 percent have increased their coverage, 29 percent have decreased their coverage and 17 percent report dropping their coverage altogether.

These findings are an indication of encouraging trends in contrast to the downward trend in life insurance sales this year. During the first six months of the year of 2009, individual life insurance premiums annualized fell by 23 percent. This is the steepest decline during a six month period since 1942, according to information released by a Windsor, Conn.-based research and consulting company, LIMRA International, Inc.

CEO of First Command Financial Services, Inc., Scott Spiker says that the fact that middle-class consumers are not reacting to the economic turmoil by sacrificing their life insurance coverage is encouraging. He says that the act of canceling one’s insurance policy during financial pinches is a move that is fraught with financial peril. He points out that life insurance serves as a safety net that is there for a family when tragedy strikes.

Of those included in the above study in August, three percent indicate that that their employers have made changes to their life insurance coverage as a result of the diminished economy. Of those reporting this, 70 percent indicate that their coverage has been decreased. Another 34 percent of respondents say that they feel extremely or very comfortable with their life insurance coverage. This is a slight drop from the figure of 40 percent for February of 2008. For consumers working with a financial planner, indicated comfort levels were substantially higher with 43 percent of respondents engaged with a financial planner indicating that they felt extremely or very comfortable with their life insurance coverage. This may be compared to the figure of only 31 percent for respondents who are not currently engaged with a financial planner who reported feeling extremely or very comfortable with their life insurance coverage.

As a part of its September observance of Life Insurance Awareness Month, First Command surveyed consumers with regard to their life insurance coverage. Life Insurance Awareness Month was created by the LIFE Foundation in response to increasing concern with regard to the large number of Americans who lack adequate life insurance protection. A figure reported by LIMRA International, states that 68 million adult Americans have no life insurance, and even those who do have coverage have far less than that being recommended by the experts as being necessary for sufficient protection.