RADNOR, PA — As a result of COVID-19, American consumers are more focused on financial planning, with 60% of respondents thinking differently about their financial future, according to a new study from Lincoln Financial Group (NYSE: LNC).1 With respondents most likely to feel ‘stressed’ or ‘anxious’ about financial planning, consumers are motivated to take action, ranking life insurance as one of the top three most important financial assets to continue funding (after emergency savings, and tied with retirement savings accounts). Nearly a quarter of millennials said the importance of funding life insurance has increased for them, the most among any generation.
“As we head into Life Insurance Awareness Month, it’s encouraging to see the importance of life insurance resonating across generations, with increasing appeal among younger demographics,” said Mike Burns, Senior Vice President of Life Solutions, Lincoln Financial Group. “Life insurance is more than financial coverage in the form of death benefit protection for your loved ones. There are also ‘living benefits’ that can be drawn from a policy, making life insurance an asset that you can buy not just for your family, but also for yourself.”
Building a Comprehensive Life Insurance Strategy
Among life insurance owners or those planning to purchase a policy, income replacement for family in the event of death, covering funeral/burial expenses, and financially protecting family in the case of a chronic illness or disability were the top reasons cited for purchasing a policy. Millennials were significantly more likely than Gen X and Baby Boomer respondents to also cite life insurance’s ability to provide tax-free retirement income as an important reason for selecting coverage or owning a policy.
Overwhelmingly, the amount beneficiaries receive is the top consideration when purchasing a policy, cited by 83% of survey respondents. The ability to also generate savings (cash value) with the policy was important to 57% of millennials, compared to 29% of Gen X and 22% of Boomer respondents. Similarly, 46% of millennials said the flexibility to withdraw money from a policy is important compared to 24% of Gen X and 13% of Boomers respondents.
When deciding when and where to purchase life insurance, it is important for consumers to consider all of their options. Today’s life insurance market offers a diverse set of solutions across various price points so consumers can tailor coverage to their specific needs — ranging from lower-cost Term life insurance that can be purchased through an employer or outside the workplace for simpler needs, to permanent products that provide longer-duration coverage and added flexibility.
Coverage amount was not only the top policy feature cited by respondents, but it was also the top factor when selecting a life insurance carrier, followed by cost. Millennials were significantly more likely than any other generation to also say the speed in which they can get approved for coverage is an important consideration when selecting a carrier. Today, companies like Lincoln Financial have made it possible to potentially get coverage in as little as 24 hours, with a completely digital end-to-end life insurance purchase process, including the potential for qualifying clients to have underwriting labs waived.
“Life insurance coverage is critical in helping families secure their financial futures,” said Ralph Ferraro, Senior Vice President, Head of Product, Workplace Solutions, Lincoln Financial Group. “With workplace open enrollment season underway, Life Insurance Awareness Month is the perfect time to work with a financial professional to assess how life insurance fits into your holistic financial plan and then build a comprehensive life insurance strategy, whether that’s through coverage provided by your employer, a financial professional or both.”
Resources to Help You Plan
To help consumers understand the various ways life insurance can fit into a well-rounded financial plan, throughout the month of September, Lincoln Financial will be publishing expert insights and real-world life insurance stories in its newsroom on LincolnFinancial.com. Today’s insights, found here, are provided by Dianna Parker, a financial planner and National Resource with Sagemark Consulting with more than 30 years of experience helping business owners, individuals and families secure their financial futures with life insurance.
Lincoln also offers the following resources to help consumers begin their life insurance planning process in consultation with a financial professional.
- Life Insurance Planning Guide
- Life Insurance Calculator
- Life Insurance Selection Tool
- Living Benefits Guide
Complete findings from the Lincoln Consumer Sentiment Study are available here.
- Lincoln Financial Group, Consumer Sentiment Study, July 2020-2021
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