Americans Curb Expenses, but Hold on to Life Insurance

Americans are examining their spending habits, eliminating luxuries and trimming living expenses, but the tremendous majority of Americans (93 percent) still consider life insurance a “must.”

What’s more, although they may be cutting coupons along with other everyday expenses, a report issued by Prudential Financial Inc., “The Value of Life in Tough Economic Times,” indicates they are not ready to cut life insurance from their tightened budgets.

The study found that although 70 percent have cut back on routine expenditures, 84 percent say they perceive the cost of life insurance to be relatively inexpensive compared to the other items included in the household budget. Indeed, over the past 18 months, 80 percent have maintained the same coverage as before the recession, 14 percent sought more coverage, and a mere 6 percent cut back on their life insurance.

Notably, the study revealed why consumers have elected to hold on to their life insurance coverage. Ninety-five percent understand that procrastinating until they’re older could make coverage harder — and significantly more expensive — to get. And, as age and overall health typically are closely connected, 55 percent are worried that coverage could be much harder to obtain due to health conditions. Furthermore, 94 percent said they “value the ‘guarantee’ that my life insurance coverage is there, if ever needed,” and 93 percent cited “Whatever happens, protecting my family/loved ones is a must.”

However, the study found that 18 percent of Americans lack life insurance, and another 22 percent only have insurance through their employer — which would likely be inadequate if they plan to use their employer-sponsored coverage to meet their goals.