Bridging the life insurance divide: Insights on coverage gaps among key demographics

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LIMRA’s 2024 Insurance Barometer Study reported that women are less likely than men to have life insurance, with only 46% of women indicating they have coverage compared to 57% of men. This 11-point gap is the largest observed in the study’s 14-year history.

To explore the disparities in obtaining life insurance coverage and how consumers can overcome these challenges, we spoke to Karen Terry, assistant vice president and head of LIMRA Insurance Product Research. 

A lightly edited version of Insure.com’s conversation with Terry follows.

Insure.com: Do consumers have enough life insurance coverage? Which demographics tend to be underinsured and why?

Terry: Women and people who identify as Black, Hispanic, or LGBTQ+ are less likely to own life insurance. Those who do own it tend to say they need more coverage. We estimate that approximately 56 million women in the U.S. need life insurance coverage. 

This disparity in life insurance ownership highlights a broader issue. Women tend to express less confidence in their life insurance knowledge, which can cause them to put off making a decision. Younger consumers, alongside Black and Hispanic consumers, are more likely to think that life insurance is only for paying for final expenses. However, life insurance can help with many other financial needs — such as paying off a mortgage, college savings, and, of course, income replacement. 

Having knowledge and confidence empowers consumers to feel secure in their buying decisions.

Insure.com: What are the biggest barriers to getting coverage, and how can consumers overcome them?

Terry: The primary reason consumers give for not purchasing life insurance is the cost. However, getting life insurance may be more affordable than you think. Only about 25% of people correctly estimate the cost of life insurance — most overestimate it by as much as three times its actual cost.

Uncertainty is the other big barrier. Many people aren’t sure which type of coverage is best for them or how much they need.

Seeking advice from an agent or financial advisor is the most effective solution. A financial advisor can guide you in selecting the right type of life insurance by assessing your financial situation, understanding your long-term goals, and recommending coverage that aligns with your needs.

Insure.com: What are the consequences of not purchasing adequate life insurance coverage?

Terry: Losing one income (or sometimes the only income) for a household can be financially devastating. According to LIMRA research, almost half of U.S. adults say they would experience financial hardship within six months if one of their primary wage earners passed away. Life insurance is an important safety net that helps cover the gap caused by lost income. It can be used to pay the mortgage and other regular bills, helping loved ones stay in their home and maintain their standard of living. It can also fund savings goals such as retirement and college savings. 

Insure.com: How can consumers accurately assess their life insurance needs and determine the right amount of coverage?

Terry: Consumers should begin by considering everything their income currently supports. They should tally the costs of their mortgage or rent, loan payments, property taxes, and other monthly expenses. Additionally, they might consider whether they are contributing to a 529 account for college savings.

Many online tools, such as those offered by insurance carriers and financial websites, can help people calculate their coverage needs. However, the best option is to find a financial professional who can help them evaluate their needs and provide a personalized recommendation. 

Our research shows that only 38% of consumers are working with a financial professional, while 28% are currently looking for someone to work with. 

Insure.com: What steps can consumers take to ensure they can access coverage and overcome barriers such as price or eligibility?

Terry: Life insurance can be quite affordable if you plan ahead, particularly when purchased at a younger age when individuals are typically healthier. 

However, many people delay buying coverage until a life event, such as marriage, having children, or purchasing a home, prompts them to recognize its importance. In fact, 20% to 30% of consumers in our research admit they simply haven’t gotten around to purchasing a policy. 

While these are often happy occasions, waiting until a new health issue arises can be problematic, as it may lead to higher premiums or, in some cases, make it impossible to qualify for the necessary coverage. Incorporating life insurance into your financial planning early on provides security when it’s needed most.

Nupur Gambhir

Managing Editor

 

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Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.