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Americans Are Caught In Cycle Of Anxiety

Armen Hareyan's picture

Among the findings released today from the AXA Equitable Protection Report, the life risks that insurance covers -- death, financial hardship, serious illness and reduction in standard of living -- are on the minds of Americans, more so than people in 10 other countries surveyed.

This unique survey -- developed by AXA to enhance its understanding of the issues, attitudes and behaviors surrounding life risks and protection coverage

"Overall, our survey findings indicate that many Americans appear to be caught in a cycle of anxiety," says Ken Gelman, Vice President and Director of Customer Insights for AXA Equitable Life Insurance Company. Despite their concerns, Americans lag in acting to protect against the impact of such negative life events." According to the report, 87 percent of Americans with a spouse or partner have spoken about life risks with that person. A third of them, however, discuss it only in passing, and fewer than half of Americans surveyed have spoken to an insurance agent or broker about preparing for life risks.

Many Can't Explain Inertia

While 63 percent of Americans believe life insurance protects their loved ones and provides peace of mind, 34 percent of them have not purchased coverage themselves and 18 percent have no coverage at all.

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"Americans are thinking and talking frequently about life risks," says Gelman, "but their desire for peace of mind does not always result in action to protect their partners and children. And yet, when given an opportunity to explain, almost half can't state reasons as to why they don't act."

Misguided Reliance on Employer Protection

The most common reason Americans give for not purchasing life insurance is that it's provided by their employer. Compared to people in the other countries surveyed, Americans are the most likely to be covered by employer- provided insurance and also less likely to purchase insurance products themselves. However, for many, a serious gap in coverage exists.

Employer-sponsored group life insurance coverage is typically tied to a multiple of an employee's income. The average group coverage of all American households is $153,900. A calculation of existing coverage and needs, developed as part of the 2007 AXA Equitable Protection Report, reveals that on average Americans 25 to 65 years of age have an insurance gap of $180,000. Families with financially dependent children have on average the highest gap -- $371,000.

"Despite this gap, many Americans have been lulled into a false sense of security," says Gelman. "This is true even for high net worth respondents. Our study reveals that those who feel confident about their insurance coverage are often the most unrealistic about their protection needs." Nearly half of those with the highest lack in coverage -- $755,000 -- describe themselves as "feeling well insured."

Other key findings from the U.S. respondents include: