workers have gotten so used to getting free life
insurance coverage as a benefit through their jobs that
a growing number of them ó especially young workers
who have delayed starting families ó arenít
bothering to go through the hassle and expense of
purchasing individual policies.
the first time in history, more Americans are covered by
employer-based group life insurance than by individual
life insurance policies.
study published this month by LIMRA, a trade
organization for the insurance industry, found 108
million Americans have life insurance coverage through
their workplace, compared with 102 million covered by
individual life insurance.
is the first time the number of people covered by
workplace insurance has surpassed those covered by
individual insurance since the organization began
tracking U.S. life insurance ownership in 1960.
me, itís not about changing attitudes toward life
insurance. Consumers value life insurance," said
Anita Potter, assistant vice president for workplace
benefits at LIMRA in Windsor, Conn. "What is
changing more than anything else is where they are
a time when many Americans fear outliving their
retirement nest eggs more than the consequences of
losing a primary breadwinner to an early death, many
people see life insurance as a household expense that
can be eliminated from the budget ó especially if it
comes down to a choice between that and giving up
certain creature comforts many take for granted, such as
recent survey by Austin, Texas-based insuranceQuotes.com
found 37 percent of adults do not have life insurance.
The expense was the most commonly cited reason, with 59
percent of those without a policy claiming they couldnít
attitudes are rather alarming to those in the industry.
adults, particularly millennials, believe that since
theyíre currently healthy, they do not need life
insurance," said Laura Adams, senior insurance
analyst at insuranceQuotes. "But rather than being
viewed as an expense, life insurance should be viewed as
an investment as well as a safeguard for your spouse and
adults without a policy in the insuranceQuotes survey
largely belonged to the millennial generation, between
ages 18 and 29; were more likely to be single; had less
than a college degree; and earned less than $50,000.
Those without a policy said they would rather spend the
money on food and utilities, put it in savings, pay down
debt on their car or student loan, or donate it to
2016 LIMRA study is based on a sample of 4,167
STORY CAN END HERE)
Baranoff, a professor of insurance and finance at
Virginia Commonwealth University, said the problem with
employer-based life insurance is that itís not done
based on a need analysis. Itís usually an employee
benefit that pays an employee a death benefit equal to
his annual salary, or sometimes twice the salary.
employers provide life insurance, it sends a message to
the workforce that companies care about employees and
their families. The company can usually deduct premiums
for $50,000 of term insurance coverage as a business
expense, and under federal law, no employee can be
turned down for life insurance coverage as part of group
can offer additional life insurance coverage to
employees on a voluntary payroll deduction basis.
would argue that thereís some value in checking out
the life insurance offerings that an individual can buy,
even if it sounds like just another regular bill.
insurance agent would look at the assets and liabilities
for a family and find out where there would be a gap if
the person dies," she said, referring to expenses
such as mortgages, college debt and even day care
expenses that would come up if one parent died.
said demographics also are an important force in driving
the downward trend in life insurance policy ownership.
boomers used to be the largest generation and they are
not buying life insurance," Baranoff said.
"Their kids are older. They donít have a need.
They are not buying insurance for their kids. Actually
the kids may be earning more than the parents.
donít have a need yet if they donít have a family.
All they need is what the employer provides for burial
getting life insurance coverage through a group policy
at work is the easiest and cheapest way for workers to
protect their family, there are some disadvantages.
policies offer only a limited amount of coverage, and
the employee may need a higher amount to meet a familyís
needs. Also, the group policy is only good for as long
as the worker stays with the same employer.
said trends in the insurance industry suggest the number
of Americans covered by employment-based life insurance
will continue to grow gradually.
to a 2016 LIMRA report, industrywide sales of individual
life insurance are down 45 percent since the mid-1980s,
and 30 percent of American households in 2010 had no
life insurance at all, up from 22 percent six years
formation is being put off to later years," Potter
said. "Historically, people bought retail life
insurance policies on top of company policies because
they had families they needed to cover."