Survey: Under-45 crowd way underinsured

If you want to reach out to an untapped audience for life insurance, try people under 45. They tend to underestimate the amount of coverage they need to replace their household income, according to a survey of 3,700 individuals conducted by insurance consulting firm LIMRA. On average, those between 30 and 45 carry enough coverage to replace 3.2 years of income. Those 18 to 29 have enough insurance to replace only 2.6 years of their earnings. That is simply not enough. Those under 45 require coverage equivalent to between 5.1 and 6.9 years of income, according to LIMRA. About half of the respondents, representing 30 million households, admit they're underinsured. Those under 45 cited three big reasons why they have avoided buying life insurance: competing financial priorities, lack of knowledge and procrastination. There is another, less obvious reason for the lack of coverage for the under-45 crowd: No one has pitched them on the idea. “A quarter of underinsured households said they were not approached to buy life insurance,” said Cheryl Retzloff, senior research director at LIMRA Market Research. “Clearly, there is a large market interested in buying life insurance.” Financial advisers can play a pivotal role in persuading this market that life insurance is a good idea. Indeed, one of four of the surveyed consumers said that they began shopping for coverage because an adviser had suggested that they needed it. What's more, 57% of the underinsured adults said they'd be more likely to commit to coverage if they could confide in the adviser. Customers said that they don't respond well to a hard sell. Sixty-two percent said they'd be less likely to buy coverage if the agent tried to wrap up the sale at the first meeting. Despite being known as technology-savvy, those under 45 prefer to buy life insurance through a face-to-face transaction as opposed to performing the purchase on the Internet. About 54% of this group said that they want to buy life insurance in person. Just 20% said that they would prefer the Internet. Email Darla Mercado at dmercado@investmentnews.com