Life Events
Life Planning | Current Trends
The recent global financial crisis has led to a severe decline in consumer confidence
in the financial stability of insurance companies and their ability to meet consumer
obligations. To make matters worse, a decline in global economic activity has led
to many businesses, families, and individuals to be put out of work, which reduced
a consumer’s ability to allocate funds towards purchasing insurance. However, in
light of the punishing financial effects felt globally in the last few years, risk
management considerations for businesses, families, and individuals have seldom
been as important as they are today.
Many financial experts consider risk management to be a cornerstone of sound financial
planning. Yet many businesses, families, and individuals in the U.S. are either
uninsured or substantially underinsured against many common risks, such as death,
disability, and the need for long term care.
According to LIMRA International’s life insurance facts and statistics, with a few
exceptions, there have been steady annual declines in the sale of life insurance
policies in the U.S. over the last 20 years. In 2007, nearly 3.6 million U.S. households
representing approximately ten percent of families with children under 18 had no
life insurance, and nearly one third of all U.S. adults had no life insurance in
2008. Moreover, insured married individuals in the U.S. carried only enough life
insurance to replace their income for an average of 4 to 5 years, which is substantially
below what many financial experts would recommend.
According to the Social Security Administration, the number of disabled workers
in the U.S. has risen by 35% between 2000 and 2007, and almost 30% of workers entering
the workforce today will become disabled before retirement. According to the American
Journal of Medicine, a new Harvard University report revealed that 62% of all personal
bankruptcies filed in the U.S. in 2007 were due to an inability to pay for medical
expenses. According to the American Payroll Association, 71% of U.S. employees live
from paycheck to paycheck, and according to the Social Security Administration,
70% of the private sector workforce has no long-term disability insurance. This
may be why the U.S. Census Bureau reported in 2007 that the employment rate of working-age
people with disabilities in the U.S. was 36.9%.
According to LIMRA International’s long-term care insurance facts and statistics,
while the number of long-term care insurance policies being sold in the U.S. is
rising, the number of U.S. individuals that are properly insured is still extremely
low. It is estimated that more than 20% of U.S. individuals over the age of 65 will
require some form of long-term care assistance, but only 61,000 of them have long-term
care insurance policies. With an estimated 77.8 million baby boomers between the
ages of 44 and 62 in 2008, it is estimated that more than 15 million individuals
may require some form of long-term care assistance in the next 20 years.
By engaging in our insurance planning service, businesses, families, and individuals
may be better equipped to manage a financial loss in the event of an insurable risk.