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New York Life Insurance Study: Financial Protection for American Families Plummets

06/22/2014 | 01:30am US/Eastern

A pair of national surveys looking at life insurance protection conducted before and after the Great Recession finds Americans' gap in protection has worsened considerably, according to New York Life Insurance Company.

In a release, New York Life noted that report highlights include:

Americans say they want enough life insurance, on average, to cover expenses for at least 14 years after the loss of a breadwinner, but in reality only have three years of protection in place.

The research also found substantial variation in life insurance coverage across different regions of the country.

"My question is: what happens in the fourth year? If you pass away, your paycheck goes away and your family is still in need of income," said Chris Blunt, co-president of the Insurance and Agency Group, New York Life. "It's no surprise that Americans are underinsured. What did surprise us was the magnitude of the gap and the fact that it has grown so dramatically since 2008, putting families at even greater financial risk."

Before the Great Recession took solid hold in 2008, Americans reported a median shortfall between their life insurance coverage and their self-described financial needs of $289,378.

New York Life noted that today, Americans are reporting a $320,000 "gap." This represents a 59 percent shortfall between Americans' financial goals and the money they would have available from their life insurance policies in the event of the breadwinner's death.

The gap has grown by 11 percent since 2008, putting Americans in even greater danger of missing widely-held goals such as paying off a mortgage, funding a four-year college education or financing a secure retirement because they lack adequate life insurance protection.

The Life Insurance Gap survey examined the financial planning attitudes and behaviors of 1,000 Americans age 25 and over with dependents. It focused on how much life insurance coverage they had in place and what they want their life insurance policies to cover in the event of the death of the breadwinner, resulting in a self- reported gap.

The study was conducted by The Futures Company and commissioned by New York Life.

"No doubt the economy has been tough on families - home values sank, the stock market got hammered, and financial assets went way down. Families are scratching for every bit of discretionary income and there is a lot of competition for their dollars. Now, sadly, we learn that five years of penny pinching and cutbacks have extended to the core safety net Americans need to protect their families. We believe this is one area that shouldn't be ignored," said Blunt. "We hope this survey begins a discussion at kitchen tables across the country and that families do what they can to build up their financial protection. Even if you can't afford the ideal coverage for your needs, something is always better than nothing."

New York Life Insurance Company, a Fortune 100 company, is a mutual life insurance company.

More information and complete details:

www.newyorklife.com

http://www.newyorklife.com/about/2014-press-releases

((Comments on this story may be sent to newsdesk@closeupmedia.com))

(c) 2014 ProQuest Information and Learning Company; All Rights Reserved.

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