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Today’s Widows Still Need Life Insurance

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By Linda Koco

There was a time when life insurers put a lot of time and effort into educating producers and the public about the financial impact of the loss of a spouse.

That was in line with the industry’s long-standing mission. This was to ensure that families had enough coverage on the major breadwinner to ensure the family’s financial security should the breadwinner die “too soon.”

But in recent times, more attention seems to be going toward education about the financial protection issues and needs of spouses who separate or divorce.

In April, for instance, Securian Financial Group published a study on the financial impact of divorce after a long marriage. In September, Strategic Business Insights published a study on the impact of divorce on retirement. And in the last couple of years, so-called “divorce planners” or advisors seem to be getting a toehold in the ranks of insurance and financial practitioners.

With people living longer and the separation and divorce rates remaining stubbornly high, it makes sense that the industry would want to learn more about the financial needs of the once-married.

But a married couple’s need for life insurance is still very much alive. This morning, for example, New York Life released results of a 2014 study it did on the loss of a spouse. Among other things, the researchers found that 68 percent of widows reported experiencing significant life changes following the loss, and that financial concern was at the top of the list.

One might have expected to see such a percentage during the era (in the 1950s, say) when the large majority of married women were primarily housewives who did not work outside the home and so had little or no independent financial means. If their spouses did not have life insurance, the widow faced a grim financial future.

In the 2000s, though, when many married women have been the workforce for years, often decades, it’s an eyebrow-raiser to see that widows are still facing financial hardship following death of the husband.

New York Life’s researchers sampled views of 897 widows and widowers who had suffered the loss of a spouse within the past 10 years. Classified by age, 33 percent were 65 years old and under, and 67 percent were over 65. A key finding is that the majority of women said they suffered financial hardship after their spouses’ deaths. Widowers reported financial stress too, but not in the same proportion.

For instance, 66 percent of widows reported experiencing a “significant financial change” compared to half of widowers. Heading the list of significant changes was “adjusting to a change in income level,” with 55 percent of the widows naming this versus just 34 percent of men.

Those findings alone make a compelling case for married people to carry life insurance, and for advisors never to fail to speak with them about this.

The researchers found an even more compelling reason as well: Two in five widows whose spouses did not have life insurance at the time of loss (39 percent) reported that they were just making ends meet or struggling to meet basic needs within the first year of the loss.

Bottom line: Even though many wives work in addition to their husbands, marrieds still need life insurance.

Some consumers discover their need for life insurance too late. For instance, nearly half of women (47 percent) told researchers that they wish they had some or more life insurance proceeds to help cushion the financial impact of the loss.

Hindsight is always interesting, but where buying life insurance is concerned, what couples really need is foresight—the kind of foresight that life insurance professionals and carriers are well positioned to provide.

 

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Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Connect with Linda →

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