Almost one-third of Americans age 18 and over have no life insurance protection, according to the insurer MetLife, which commissioned a survey of U.S. households.
Of the households that do have protection, MetLife reports, 30% have coverage that's less than one times their annual income. Of those households, 76% believe the amount they have is adequate.
The survey, conducted by Roper ASW LLC, also revealed what MetLife called "alarming statistics" concerning the "prime needs" segment - those full-time employees with dependents.
Only 64% of this demographic have any type of life insurance protection. Of those that do have coverage, 58% revealed that the amount of coverage is less than three times their household income. The majority of those with this minimal coverage also reported that they believed the amount of coverage was adequate.
Metlife says employees need to consider whether three years or less of household income will be enough to provide for a child's education and pay monthly expenses such as a mortgage, rent, car loan, or childcare over a long period, especially if they have not adequately saved for these expenses.
"Most people give very little thought to their group life insurance benefits - simply maintaining the same level of life insurance coverage year after year. With annual enrollment season currently underway at many companies, it is more important than ever that employees have the educational information and tools they need to make realistic assessments of their personal situations," said Michael Witwer, vice president, MetLife.
MetLife says employers can assist their employees in protecting their families by:
- Utilizing the company intranet. Web-based tools and information can be designed with the specific needs of employees in mind. An interactive tool like a life insurance calculator is ideal in helping employees determine the appropriate amount of life insurance that's right for their particular personal situation.
- Working closely with their insurance carrier or intermediary to make sure that messages are easy to understand and that they demonstrate the value of life insurance as an essential component of an employee's overall financial plan. Messages should clearly communicate the need for life insurance, rather than simply the election options available.
- Encouraging employees to purchase supplemental coverage available through their employer. Their personal assessment will rarely be satisfied by the employer paid basic life benefit, which is typically equal to one times salary. It's also important to stress to employees to do a personal assessment regularly, as their circumstances change.
- Considering proactively prompting employees to complete a new life insurance assessment when notified of a change in family status - such as a new child, marriage, etc.
- Increasing employer visibility and endorsement of the group life benefit. Performing on-site group meetings and seminars including the endorsement by company management in presentations are all helpful in increasing employee participation rates in purchasing supplemental coverage.
The MetLife survey consisted of 1,013 telephone interviews of consumers ages 18 and older between August 16-18, 2002. The margin of error for the survey is +/- 3%.
