Earlier this month I highlight studies on how more consumers plan to be smarter when it comes to managing their own money and financial data as they dig out from the effects of the recession. Another survey on this topic, from First Command, finds that middle-income consumers, those earning at least $50,000 annually, realize that life insurance is an important component of a secure financial future. Typically, major life events such as having a baby or purchasing a home often trigger the purchase of life insurance policies. During the recession, First Command points out that only 4% of consumers made changes to their policies.
Here are the specific actions taken by consumers who change their policies:
- Consumers who have increased coverage: 42%
- Consumers who have decreased coverage: 29%
- Consumers who have eliminated coverage: 17%
Slightly more consumers cut back or eliminated life insurance coverage which contributed to the industry’s premium drop of 23% between January and June, 2009. And First Command analysts noted that some employers have been cutting life insurance benefits. This change has left consumers worried that their coverage may not be sufficient. Despite the fact that few current holders of life insurance policies have adjusted coverage, companies must increase sales to address the steep drop in premiums that occurred in the first half of 2009. Life insurance companies, who often work closely with financial planners to sell policies, may increase marketing campaigns to help consumers understand the importance of coverage to replace income in the event of tragedy.[Source: Company release, First Command, 9.8.09]