Life Insurance Gap Among Gen Xers Increases

The life insurance coverage gap among Generation X households rose by 24% over a five-year period ending in 2013. The life insurance coverage gap is the amount by which a breadwinner is underinsured for life insurance. This is according to a pair of surveys conducted by Futures Group and published in Insurancenewsnet.com.

The median amount of life insurance coverage in place for Gen X households in 2013 was $260,000, while the amount necessary to cover the breadwinner’s needs was $708,996, leaving a gap of $448,996. In 2008, the gap was $362,688.

Gen Xers are Americans born roughly between 1965-1984. Gen Xers are under enormous financial pressure, from saving for college or taking care of elderly parents. Gen Xers are entering their peak financial years and many know they need more life insurance.

Among Generation X households, the life insurance coverage gap — that is, the amount by which a breadwinner is underinsured for life insurance — rose by 24 percent to $448,996 over the five-year period ending in 2013, according to a pair of surveys.

The median amount of life insurance coverage in place for a Gen X breadwinner in 2013 was only $260,000, but the amount necessary to cover that breadwinner’s household needs was $708,996, leading to a gap of $448,996, according to the survey released today by New York Life.

In 2008, the gap came to $362,688, the survey found.

“Gen Xers have been severely impacted by the economic downturn and the gap is a clear indication of what is at risk,” said Chris Blunt, president of the insurance group at New York Life, which commissioned the survey.

Gen Xers — Americans born roughly between 1965 and 1984 — are under enormous financial pressure, from saving for college to taking care of an elderly parent. Even as Gen Xers enter their peak earning years, many of them know they don’t have enough life insurance coverage.

For Gen Xers, the amount of life coverage in place dropped from $400,000 in 2008 to $260,000 in 2013, a decline of 35 percent, the survey also found.

The life insurance gap has an impact on more than half (56 percent) of Gen Xers, the survey found, and less than one in five (19 percent) said they have enough life insurance to cover everything they expect their insurance to pay for.

“What this study makes clear is that the cost of doing nothing can be enormous at any age, but Gen Xers are clearly most at risk and most exposed to inadequate life insurance coverage,” Blunt said in a news release.

As a group, Gen Xers are much smaller than the 78 million-strong baby boom generation, members of whom started retiring in large numbers in 2011. The life insurance gap among boomers was $267,016 in 2013, the survey found.

Among millennials, the generation following Gen X, the gap was $370,744 in 2013, the survey also found.

The survey was conducted by The Futures Group, which collected answers from 1,004 people surveyed online between April 24 and May 1. Participants were 25 or older, married or with financial dependents and had household income of at least $50,000.

The amount of coverage held on Gen Xers dropped from $400,000 in 2008 to $260,000 in 2013, a decline of 35%.  The life insurance gap has an impact on more than 56 percent of Gen Xers.  Only 19 percent said they had enough life insurance to cover everything they expect for their insurance to pay.  Gen Xers have the largest insurance gap when compared to boomers and millennials.

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