The Millennial generation is now the least prepared for unexpected life events due to a lack of adequate life insurance coverage, according to the latest edition of New York Life’s Life Insurance Gap survey. The survey asks Americans to compare how much life insurance they need, based on living expenses and plans for their loved ones, with the amount of life insurance protection they have in place.
The results that find that the Millennials are most exposed contrasts with the 2013 edition of the study, which found Gen X under the most pressure.
Millennials with life insurance have a self-reported life insurance gap of $352,000 in 2018, with enough life insurance protection in place ($100,000) to cover only 22% of their self-reported coverage needs ($452,000). The Millennial generation’s gap is sharply higher – 60% greater, in fact – than the gap for the general population, which is $210,000, enough to cover 49% of the average estimated need.
In addition, the survey findings illustrate that only 10% of Millennials have enough life insurance to cover 100% of their needs, which can include mortgages, funding retirements, or financing a child’s college education. Millennials feel more financially secure, however, than the overall population, with 81% saying they feel financially secure versus 76% of all respondents.
“While ten percent of Millennials already enjoy the peace of mind that comes from taking a protection-first financial planning approach, too many members of this generation are starting a family or buying a home without access to replacement income if the worst were to happen,” said Brian Madgett, vice president, New York Life. “Life for young families is unquestionably busy and complicated, but there is security and peace of mind in looking beyond today, and knowing their loved ones are protected against future financial shocks.”
New York Life’s Life Insurance Gap survey examines the financial planning attitudes and behaviors of 1,738 Americans ages 25-70 who are married, have financial dependents, or both, including 1,176 adults who have life insurance. The survey focuses on how much life insurance coverage Americans currently have in place and what they want their life insurance policies to cover in the event of the death of the breadwinner, resulting in a self-reported gap. Both the 2013 and 2018 gap surveys were commissioned by New York Life.
Additional key findings from the Life Insurance Gap survey include the following:
Despite feeling financially secure, 48% of Millennials are stressed about their current level of savings; 47% are stressed about planning for their future financial needs; and 40% are stressed about their current level of income and saving for their children’s education.
44% of Millennials are not financially prepared to deal with the death of a breadwinner and 42%are not financially prepared for the possibility of losing their job.
“Millennials are missing an opportunity to take a ‘protection first’ approach to financial goals such as saving for retirement or owning a home,” added Mr. Madgett. “Without life insurance, even the best laid plans can be ruined by the death of a breadwinner. The good news is that more than two thirds of Millennials, who have the time and opportunity to better prepare themselves, say that having enough life insurance to protect their family is an important goal for them.”