NEW YORK--(BUSINESS WIRE)--While four in five employees today believe their life insurance coverage is adequate, 45% of working women and 28% of working men with life insurance have not evaluated their needs since obtaining their first policy, potentially leaving themselves and their families financially vulnerable in the event of a premature death. This according to MetLife’s 2011 Insurance Literacy Study, released today.
Working women with life insurance are also nearly twice as likely as men (21% vs. 12%) to acknowledge they don’t know how much coverage they have and are also more likely to underestimate how much coverage might be needed. While a good starting place for life insurance coverage is typically outstanding debt plus five years of salary, 54% of women and 47% of men believe coverage equal to outstanding debt and only three years of salary or less will be adequate. The study also found that only one in four men or women considered outstanding debt when calculating their life insurance needs yet 52% want their death benefit to cover these obligations.
Men and women have different desires for what they want their insurance policies to cover. Nearly three-quarters (73%) of married men say their number-one expectation for their life insurance coverage is to pay for future living expenses for their spouse, compared to 47% of married women. For married women, the number-one expectation is to cover their final expenses (69% versus 55% of married men). However, both married men and women express nearly identical levels of interest in protecting the financial futures of their children.
“Honestly assessing your expectations for your life insurance policy is an important step to ensuring you have the right amount of coverage. There’s a significant difference between having enough coverage simply to pay for final expenses and also having enough coverage to meet the ongoing needs of a family with children,” said Todd Katz, executive vice president, U.S. Business, MetLife. “Take the time now to learn the details of your life insurance policy so that your desires for your family’s financial security can be matched with the most appropriate features and coverage levels. And also take the time now to make sure beneficiary information is up-to-date.”
“It is so important to be an educated consumer when it comes to developing a strong financial plan. Women should not only consider life insurance coverage on themselves to protect loved ones, but also encourage spouses or partners to have coverage as well. Otherwise, the sudden loss of vital income may have a long-term negative impact for the survivor well into retirement,” said Cindy Hounsell, President of the Women’s Institute for a Secure Retirement.
Policy Features to Match Needs
The study found that more than one-fourth of those interviewed are unfamiliar with the basic features of their own life insurance policies. For example, nearly one quarter (24%) of employees who say they have term life insurance believe that this coverage offers financial protection for an unlimited amount of time. In fact, term insurance often offers financial protection for a defined time period such as 10, 15, or 20 years, or if provided through an employer-maintained group policy, for the duration of employment. At the end of these time periods, the term coverage typically may be continued, but usually with much higher premiums. In addition, 28% of those employees who own permanent life insurance are unaware that this coverage can build cash value as they pay their premiums. Permanent life insurance policies can be used to accumulate, protect and transfer wealth. Term policies are an easy and cost-effective way to get life insurance protection in the relatively short run.
Employees may also not be leveraging life insurance as effectively as they could to meet their needs. Approximately one-third of employees with coverage do not realize that life insurance, in addition to a death benefit, can be a strategic method to supplement retirement benefits and aid in estate planning.
Katz added, “As a first step, people should familiarize themselves with their employer’s life insurance benefit. There may be “living benefits” available such as will preparation or powers of attorney in addition to beneficiary assistance with estate resolution. However, don't assume that what you have at work is enough. Take time to fully understand your needs and supplement your workplace coverage as needed. Getting the right amount of insurance coverage is less expensive and less complicated than many think. Making use of coverage calculators and trusted advisors can help.”
For more information about addressing life insurance needs, visit www.metlife.com/lifeinsurancecalculator or speak with a financial advisor.
MetLife commissioned IBOPE Zogby International to conduct the MetLife Life Insurance Literacy Study. The survey sample consisted of 500 telephone interviews of employed adults who have life insurance. The interviewing was conducted from 6/22/11 to 7/1/11.
MetLife is a subsidiary of MetLife, Inc. (NYSE: MET), a leading global provider of insurance, annuities and employee benefit programs, serving 90 million customers in over 60 countries. Through its subsidiaries and affiliates, MetLife holds leading market positions in the United States, Japan, Latin America, Asia Pacific, Europe and the Middle East. For more information, visit www.metlife.com.