3 surprising facts about life insurance protection

Life Lessons

3 surprising facts about life insurance protection

America’s workers aren’t very confident in their ability to manage their money.

In fact, more than a third of U.S. adults rate their ability to manage their finances as “average,” “poor” or “very poor,” according to a new survey* by Unum.

But employers can do a lot to help during their annual benefits enrollment by making sure affordable life insurance coverage is part of their employee benefits package, according to Pam Jenkins, assistant vice president of product and market development at Colonial Life.

“Life insurance is one of the most basic building blocks of a strong financial foundation,” Jenkins said. “With rare exceptions, everyone needs life insurance.”

Unfortunately, many workers don’t understand the role life insurance plays in their financial safety net, what type of life insurance best meets their needs, or how much coverage they should have. That means employers also need to provide strong benefits education so employees can make the right choices for themselves and their families.

Need more convincing? Maybe these 3 key findings from the Unum survey will surprise you, too.

#1: Most U.S. adults aren’t using life insurance to protect their families’ finances.
Most people say they’d count on a checking account — 73% — or savings account — 65% — to help those who rely on them financially. Only 40% say they have life insurance in place to protect their families.

But those bank accounts clearly aren’t enough: Nearly half of the survey respondents say they’d have trouble paying bills or have to cut back expenses within two months if the household’s primary wage-earner died unexpectedly. And 58% said they’d feel the financial pinch within 90 days.

#2: Employees are worried about providing for their families after they’re gone.
Going to the dentist is the top anxiety-producing event, named by 40% of survey respondents. But close behind is “thinking about what would happen to family if I died” at 35%. That’s significantly more than “losing my job” at 28%.

Despite this anxiety, 40% of adults say they either don’t have life insurance or — perhaps even more concerning — don’t know if they have coverage or not.

#3: Most people vastly underestimate the amount of life insurance they need.
A third of those surveyed said one to two times their annual salary would be enough coverage, and another 24% thought three to four times their salary would be adequate. In fact, many financial pros recommend seven to 10 times annual salary.

“And that’s just a rule of thumb,” Jenkins said. “An employee’s need could be much higher if young children or other long-term commitments are in the picture.”

It’s important to offer a variety of options, including term life and permanent life, to meet employees’ different needs. Employees can select and pay for the coverage they need at no additional cost to the business.

Making life insurance options and education available during annual enrollment is a simple, affordable way to help employees build their financial savvy — and protect their families’ futures.

* Online survey fielded by DYNATA Aug. 13-14, 2019 among 1,000 adults ages 18+ with a representative sample of male/female and geographic distribution.

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