Insurance Machine

ARLINGTON, Va., Sept. 23
In difficult economic times such as the ones we are in now, Americans have had to make many adjustments in order to protect their family’s finances. As debt is being consolidated and being slowly paid down, savings rates are on the rise. In general, people are being more conservative in the spending and investing of their money. the time has probably come to add yet another development to the list. A new survey carried out by the nonprofit LIFE Foundation, reports that 56 percent of Americans say that the economic fall has made it even more important to have life insurance, This is compared with only nine percent who say that the need has dropped. In addition to this, during the past year a larger number of individuals have added life insurance coverage than have reduced that coverage.

Does This Mean That History is Repeating Itself?
It has occurred throughout recent history that life insurance sales increase when as the result of economic conditions consumers feel financially vulnerable. There are still those who believe that the present recession may go against the trend due to its severity. Now that family budgets are being significantly strained, experts assumed that people would drop their coverage and that sales of new policies would drop sharply. It may still be too early to know for creation the ultimate impact of the economic downturn but the LIFE survey predicts that the negative predictions will not occur.

President of LIFE, Marvin H. Feldman, CLU, ChFC, RFC, says that the American people are intelligent and that they understand the importance of protecting their loved ones with life insurance. He says that this is especially true during difficult economic times such as the present. He added that Americans comprehend that life insurance can act as a safety net for their family if tragedy strikes. He says that they are pleased that so many are holding onto their coverage, even as they reduce other parts of the family budget in order to make ends meet.

The survey was conducted by LIFE in support of Life Insurance Awareness Month. It reports that of those surveyed, 71 percent, which reflects a majority of Americans with life insurance coverage, have made no change in their coverage during the past year. Those that did make changes are represented in the following way. 39 percent report increasing their existing coverage and 28 percent say they bought life insurance for the first time. The reasons cited by those who added coverage include a desire to increase present coverage, wanting to keep up with their family’s expanding needs, and a need for extra protection to cope with a feeling of financial vulnerability.

In the last 12 months some Americans have dropped or decreased their coverage resulting from the downturn in the economy. Regarding those who did make changes, 33 percent report losing their coverage either due to a job loss or a change of job. The survey reports that of those reporting 14 percent cancelled their coverage altogether, and another 11 percent decreased their coverage.