Gen Xers are behind the times on life insurance

 A study found 20 percent of Gen Xers have no life insurance

By Samantha B. Rivers

Insurance coverage is strongly recommended (and in some cases, required by law) for assets like your home, car, healthcare and even luxuries like travel and pets. But are you adequately insured for your most precious asset: your life?

Buying a life insurance policy can help protect the people who financially depend on you in the event that you can no longer provide for them. But if you are a member of Generation X (i.e., born between 1965 and 1976), there is a good chance you do not have adequate life insurance, according to a recent study by New York Life. The study found that less than 20 percent of Gen Xers have the life insurance coverage that they report they need. The surveyed group self-reported an average gap of $448,996 between their existing coverage and what they actually need in life insurance.

The study also showed that one in every five Gen Xers has absolutely no life insurance coverage. These figures demonstrate a startling trend of middle-aged Americans buying less life insurance coverage than previous years. A similar study from 2008 found that only five percent (1 in 20 adults) lacked life insurance coverage.

A lack of life insurance can be crippling when a breadwinning parent or spouse dies and leaves his or her family to struggle financially while also mourning the loss. Life insurance coverage from State Farm or another leading insurance company can help ease the financial burden that often follows the devastating loss of a loved one.

Why are fewer Gen Xers buying life insurance?

The financial disasters that have plagued Americans since 2008 have certainly taken their toll on the number of Gen Xers who have life insurance coverage. Many families have less discretionary spending, and life insurance premiums are an easier line item to cut from the budget than grocery bills or mortgage payments.

Another explanation for the gap between Gen Xers’ life insurance needs and what they actually have is that families usually underestimate their life insurance needs.

Others put the onus on the insurance industry — the brokers and the agents — who are not adequately reaching the consumer. Many insurance agents at big companies are encouraged to sell antiquated products that aren’t necessarily tailored to today’s savvy, tech-conscious consumer. Compounding the problem may be Generation X’s inherent mistrust of the insurance industry.

Finding the right life insurance policy for your family

Larry Rosenthal, president of Rosenthal Wealth Management Group outside of Washington, D.C., believes that Gen Xers need to have five to 10 times their annual income in life insurance coverage. Since Gen Xers are usually in their peak earning years, a million-dollar policy may not even be enough, in some cases.

Some experts, like Chris Blunt, president of the insurance group at New York Life, say that any kind of life insurance is better than nothing.

Start looking for life insurance early. Rates increase with age (and with declining health), so locking in a good rate while you’re in your 30s and healthy is good for your long-term financial security. Some workplaces offer group plans that feature life insurance benefits; however, these benefits can be small and only applicable while you work for that company.

If you’re striking out on your own, Ted Bovard, managing director at Fort Pitt Capital Group (a Pittsburgh wealth management firm), suggests a basic term life insurance policy, which offers simple, affordable coverage for a set time period, typically 10 to 30 years. Alternatively, traditional whole life insurance plans involve forced savings that build up equity and are tax-deferrable. A trustworthy financial planner can always help you select the right policy to fit your family’s needs. 

About the author: Samantha is a freelance writer based in Chicago who writes about automotive and insurance topics online. Follow her on Twitter @SassySammyBee.

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