As if Americans don’t have enough financial problems, new data from a financial services trade group concludes that more than 50% of U.S. households don’t have life insurance. That’s a big financial omission, and one that could jeopardize the financial health of millions of American families.

LIMRA, a Windsor, Conn. based financial services group, says that the number of Americans with life insurance is at a 50-year low, with 44% of American adults opting to go without life insurance altogether.

That’s playing an all too real game of Russian roulette, the group says. Standard life insurance policies pay out much-needed funds to beneficiaries when policy holders pass away. Consumers are cutting back across the board these days, but that doesn’t mean it should extend to cutting back on planning for your descendants’ financial well-being.

According to a study from the Pew Research Center, 71% of Americans say they’re buying cheaper brands than they did when times were good, and 57% say they have cut back on or eliminated vacations. But as the LIMRA study points out, you really can’t equate providing financial security for your family with a five-day trip to Miami Beach.

"Clearly, more American families are living on the edge — surviving paycheck to paycheck — and, as our new study suggests, too many are without the safety net that life insurance provides," said Robert Kerzner, president and CEO of LIMRA. "The numbers tell a grim story," he adds. "Today there are 11 million fewer American households covered by life insurance compared with six years ago. A majority of families either have no life insurance or not enough, leaving them one accident or terminal illness away from a financial catastrophe for their loved ones."

LIMRA takes a snapshot of the U.S. consumer life insurance scene every six years. The total number of U.S. households without life insurance has grown from 22% in 2004 to 30% in 2010, the firm reports.

LIMRA did ask study respondents why more and more of them were rolling the dice on life insurance. For 40% of Americans, the answer was simply tight budgets. By prioritizing paying off credit card debt and tossing some cash into the pot for retirement, most had no room left over for life insurance payments.

But LIMRA also reports that if the primary breadwinner did pass away, the exact same number – 40% – say that the remaining household members would have trouble making ends meet immediately. In addition, another 30% said they’d run into serious financial trouble within a few months.
So how can Americans take the necessary steps to grab some life insurance – even a limited policy that offers only modest payouts? LIMRA says the insurance industry needs to do a much better job educating consumers about the need for life insurance and how many policies can be had for less than $100 per month.

"As an industry, we need to reach out to consumers and educate them about the various ways they can purchase life insurance," says Kerzner. "Whether they buy from an agent, get coverage through their employer or make an online purchase, the important thing is that they get the coverage they need.”

Hopefully, more Americans will embrace that message. It’s not something that many Americans want to hear, but life insurance really is a matter of life and death.

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