By Cyril Tuohy
Among members of Generation Y, women and mothers between the ages of 18 and 30 are most likely to be uninsured or underinsured for life insurance, a recent survey finds.
Traditionally, would-be families consulted with a financial advisor before starting a family. Today, young families consider advisors less valuable than previous generations did when they started out, writes New York-based financial planner and advisor Thomas Rockford.
Just over 10 percent of respondents under the age of 30 used an advisor, compared to about 55 percent of respondents 46 to 65 years old who said they used an advisor, a survey by Life Ant found. Life Ant is an organization and website devoted to affordable life insurance.
Rockford, who launched Life Ant in January, said there is a connection between categories of buyers most likely to be uninsured or underinsured, and the lower frequency with which these buyers consult financial advisors.
Rockford said there’s “nothing inherently wrong” with taking financial planning into one’s own hands. But he added that a lack of understanding about financial planning “often causes people to either intentionally or not omit life insurance from their financial plan.”
So how underinsured are new mothers? Less than 20 percent of new mothers under the age of 30 have life insurance, the survey found. By comparison, 35 percent of fathers between the ages of 18 and 30 have life insurance, the survey also found.
“The entire (under 30) generation seems to show less affinity for life insurance products, and women - in particular new mothers - represented a much higher percentage of the uninsured population,” Rockford wrote in a blog post.
The category with the next-highest likelihood of owning life insurance is women and mothers between the ages of 31 and 45. Just over 30 percent of women in that age bracket own life insurance, and nearly 40 percent of mothers 31 to 45 own life insurance, the survey found.
Young mothers often rely on their working spouses for coverage through employer-sponsored group life programs, so young moms may not feel the need to buy it for themselves.
Still, losing a mother or father represents a hit to the family budget, either in the form of caregiving or supplying income, Rockford said.
More than 30 percent of women ages 46 to 64 owned life insurance, and more than 40 percent of mothers in that age band were covered, the survey found.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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