Life Insurance: Millions Left Uninsured And Unprotected

Life insurance is a valuable financial planning tool that provides financial protection to the policyholder's loved ones in the event of their death. However, despite its importance, a significant number of people remain uninsured or underinsured. According to a 2024 study, 51% of Americans reported owning at least one life insurance policy, while 42% of adults needed to obtain life insurance or increase their coverage. This gap between those who have adequate coverage and those who need it is significant, with about 102 million adults lacking sufficient protection.

One of the main barriers to purchasing life insurance is the perception of high costs. Many people believe that life insurance is too expensive and overestimate the cost of a basic term life insurance policy. This misconception has led to a substantial number of individuals being left uninsured, as they consider it unaffordable. Additionally, other financial priorities and uncertainty about the necessary coverage amount also contribute to the decision to forgo life insurance.

While life insurance ownership rates vary across different demographic groups, certain trends are evident. Women, for example, trail behind men in ownership rates, and this gap has persisted for several years. Baby Boomers have the highest rate of life insurance ownership, while younger generations, such as Gen Z and Millennials, show a growing interest in obtaining coverage despite lower ownership rates.

The life insurance industry has experienced fluctuations, but recent trends indicate a positive shift towards increased policy sales and a recognition of the value of life insurance. This suggests that efforts to address misconceptions about cost and provide more flexible policy options are having a positive impact.

25.3 million people aged 0-64 uninsured in 2023

In 2023, 25.3 million people aged 0-64 were uninsured in the United States. This number held steady from the previous year, but it did represent a significant decline from 2019, when there were 3.6 million more uninsured people in this age group.

The uninsured rate for the population aged 0-64 in 2023 was 9.5%, a historic low. While there was no change in the overall uninsured rate from 2022, the share of uninsured children aged 18 and younger increased from 5.1% to 5.3%. At the same time, the uninsured rate for adults aged 19-64 decreased from 11.3% to 11.1%. An increase in Medicaid coverage for adults in this age group drove this decline.

Most of the 25.3 million people aged 0-64 who were uninsured in 2023 were adults in working, low-income families, and people of colour. Geographic variation was also evident, with most uninsured individuals living in the South or West of the country. Additionally, 74.2% of the uninsured were US citizens, while 25.8% were non-citizens.

The high number of uninsured individuals in the US is concerning, as it can have significant implications for access to healthcare and financial stability. Uninsured people are less likely to access care and more likely to delay or forgo it due to costs. They also often face unaffordable medical bills and medical debt, which can lead to financial instability and difficulty paying living expenses.

Furthermore, being uninsured can have serious health consequences. Uninsured adults are more likely to postpone or forgo necessary medical care due to costs, which can result in preventable conditions or chronic diseases going untreated. Research has linked a lack of health insurance to higher death rates, with one study finding that uninsured working-age Americans had a 40% higher risk of death than their privately insured counterparts.

Addressing the issue of the uninsured population in the US is crucial to improving access to healthcare, reducing health disparities, and ensuring financial stability for individuals and families.

4.0 million uninsured children in 2023

In 2023, the number of uninsured children in the United States increased to 4 million, up from 3.8 million in 2022. This represents a half-point increase in the children's uninsured rate since 2022, with the rate rising from 5.1% in 2022 to 5.3% in 2023. The increase in the number of uninsured children occurred despite overall coverage rates for the population aged 0-64 holding steady.

The rise in the number of uninsured children is particularly concerning given the critical role that health insurance plays in ensuring access to regular preventive and primary care. Uninsured children are less likely to receive needed primary and preventive care and are more likely to face unaffordable medical bills if they become sick or injured.

The increase in the number of uninsured children in 2023 may be attributed to several factors, including changes in family income, losses in employer-provided coverage, and administrative issues with public health insurance programs such as Medicaid and the Children's Health Insurance Program (CHIP).

Hispanic children experienced the highest loss of coverage, with an increase of 0.8 percentage points from 2022 to 2023. This is particularly concerning as Hispanic children are already disproportionately impacted by a lack of health insurance. In 2021, more than half of Black, American Indian or Alaska Native, and Hispanic children relied on Medicaid and CHIP as their source of health coverage.

The rise in the number of uninsured children underscores the importance of ensuring continuous eligibility and coverage for children, especially those from low-income families. Continuous eligibility would guarantee uninterrupted coverage for children, preventing gaps in coverage and reducing the risk of uninsurance due to income fluctuations or administrative issues.

30% of Americans recognise need for life insurance but don't have it

Life insurance is an important financial planning tool that provides financial protection for your loved ones. However, despite its importance, 30% of surveyed Americans recognise their need for life insurance but don't have it. This discrepancy can be attributed to various factors, including misconceptions about cost, lack of awareness, and other financial priorities.

The Insurance Barometer Study, conducted by LIMRA and Life Happens, provides valuable insights into this phenomenon. The study reveals that about 30% of those without coverage acknowledge their need for life insurance but have not purchased it due to perceived high costs, uncertainty about the necessary coverage amount, and competing financial commitments. This highlights a significant gap between the understanding of the need for life insurance and the action of obtaining it.

Additionally, the study shows that younger generations, such as Gen Z and Millennials, exhibit a stronger intent to buy life insurance within the next year compared to older generations. This can be attributed to their lower likelihood of having coverage and their recognition of the need to protect their loved ones. Furthermore, single mothers, who often serve as the sole source of financial support for their children, have a higher need for life insurance but lower rates of ownership.

Another factor influencing the decision to purchase life insurance is income level. The study found that 39% of those earning $50,000 to $149,999 annually reported a need for more life insurance, indicating a significant interest from middle-income consumers. This highlights that financial considerations play a crucial role in an individual's decision to purchase life insurance.

Furthermore, the study revealed a persistent gender gap in life insurance ownership, with women being less likely to have life insurance than men. This gap has consistently existed over the past 14 years, underscoring the need to address the unique barriers and considerations that women face when it comes to financial planning and life insurance.

While the awareness of the importance of life insurance is essential, addressing the barriers that prevent individuals from obtaining coverage is crucial. By doing so, the life insurance industry can better serve its customers and ensure that more people have access to the financial protection they need.

41% of adults report insufficient life insurance coverage

Life insurance is a crucial financial planning tool that provides financial protection to the insured's loved ones. However, despite its importance, a significant number of Americans feel they don't have adequate coverage.

The Insurance Barometer Study conducted in 2024 by LIMRA and Life Happens revealed that 42% of American adults feel they need to obtain life insurance or increase their existing coverage. This gap between those who have life insurance and those who need it includes about 102 million adults, comprising both the uninsured and underinsured.

The study also highlighted a persistent gender gap, with women being less likely to have life insurance than men, a disparity that has remained consistent over the past 14 years. In 2024, 46% of women had life insurance, compared to 57% of men. Additionally, single mothers were the least likely to have life insurance coverage, with only 41% of this demographic owning a policy.

Cost is a significant barrier to purchasing life insurance, with 30% of those without coverage citing high expenses as the main reason. Other obstacles include competing financial priorities and uncertainty about the necessary coverage amount. Misconceptions about the cost and a lack of awareness about coverage needs also contribute to the gap.

Furthermore, the study showed that age played a role in life insurance ownership, with younger people being less likely to have sufficient coverage. Gen Z, Millennials, and Gen X reported the highest levels of insufficient coverage at 49%, 46%, and 45%, respectively. However, there is a growing interest in buying life insurance among younger generations, with life insurance enrollment for young adults increasing year over year.

Income is another factor influencing life insurance ownership. Middle-income Americans, with annual earnings between $50,000 and $149,999, demonstrated the biggest gap in coverage. About 40% of middle-income adults, or 50 million people, lacked a life insurance policy or had inadequate coverage.

In summary, while life insurance is essential for financial security, a significant proportion of adults, particularly women, younger individuals, and middle-income earners, feel they don't have enough coverage. Addressing misconceptions, improving financial education, and making coverage more accessible and affordable can help close the gap between those who have life insurance and those who need it.

44% of households would struggle financially if they lost primary wage earner

Life insurance is an important financial tool that provides financial protection to the families of the insured. However, despite its importance, a significant number of Americans remain uninsured or underinsured. According to a 2024 study, 51% of Americans reported having at least one life insurance policy, indicating stable coverage levels over the years. This means that nearly half of Americans are left vulnerable to financial difficulties in the event of the insured's death.

The study also revealed that 30% of those without coverage recognize the need for life insurance but have not purchased it due to perceived high costs, other financial priorities, or uncertainty about the necessary coverage amount. This gap between those who have life insurance and those who need it is significant, emphasizing the challenge for the industry to address misconceptions about cost and educate consumers on the value and potential affordability of life insurance.

The consequences of being uninsured or underinsured can be dire. Uninsured individuals often face unaffordable medical bills and accumulate medical debt, as they are less likely to access care and more likely to delay or forgo it due to costs. In addition, being uninsured can lead to difficulties in paying bills, as unexpected expenses or loss of income can disrupt household finances.

Low-income households are particularly vulnerable to earnings and work hours instability, with more than half of households earning less than $25,000 per year experiencing volatile income that varies month-to-month. This instability is not due to their preferences but reflects the nature of the low-wage labor market, with unpredictable work schedules and volatile income leading to financial distress.

The situation is further exacerbated by the high cost of living, which has outpaced wage growth, especially for low and middle-income earners. As a result, 44% of households would struggle financially if they lost their primary wage earner, highlighting the importance of financial planning and adequate insurance coverage to protect against unforeseen circumstances.

Overall, the gap between those who have adequate life insurance coverage and those who need it remains significant. Addressing this gap is crucial to ensure financial security and preparedness for individuals and their families.

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