Contact Form


Email *

Message *


Friday, October 15, 2010

October 4, 2010

Letter to the Editor
The Wall Street Journal
1211 Avenue of the Americas
New York, NY, 10036

The Complete Picture

Shift to Wealthier Clientele Puts Life Insurers in a Bind (Oct. 4, 2010) It is true, wealthier Americans spend more on life insurance than middle-income Americans – they generally need more coverage and therefore pay higher premiums. Many experts recommend buying enough life insurance to cover six times salary so the family can meet its financial obligations if the primary wage-earner dies. Clearly – larger policies will be bought more often by more affluent households.

But this doesn’t provide the complete picture. When LIMRA releases its sales results, we always give two metrics: premium and policy count. The reason we share both is because each is very important to get a complete picture of the life insurance market.
Let’s take a look at what happens when you look at policy count.

The majority of existing permanent policies are owned by middle-market consumers. The affluent (household income of $100,000 or more) own just 27 percent of existing permanent life insurance policies while 73 percent of the existing permanent policies are helping average Americans. Those earning $25,000 to $99,000 comprise 55 percent of the population, but own almost 60 percent of existing permanent policies.

If you look at new sales by policy count, consumers earning under $100,000 represent 72 percent of newly purchased permanent life insurance policies. So by this measure, it is truly middle America who are buying permanent and benefiting from it.

Recent LIMRA research found that 30 percent of U.S. households do not own any form of life insurance—a 50-year low. We also know that 75 percent of households have less than a month’s savings. What will these families do if their primary wage-earner died unexpectedly?

This is not the time to make buying life insurance less attractive. Collectively, we should be finding more ways to encourage consumers to get the coverage they need.

Finally, as researchers we know that it is critical to look at all the data before making conclusions. We encourage others to do the same.

Robert A Kerzner,
President and CEO of LIMRA, LOMA and LL Global
Windsor, Connecticut

No comments: