By Ashlea Ebeling, June 11, 2014
Most families say they want enough life insurance to cover 14 years of lost income should the breadwinner die, but they have enough to cover only three years, according to a Life Insurance Gap survey put out by New York Life. That stark difference between perception and reality puts families at great financial risk, says Chris Blunt, co-president of the Insurance and Agency Group for New York Life.
The gap survey looked at the median shortfall between how much life insurance coverage families have in place compared to how much they say they want life insurance to cover in the event of the death of the breadwinner. The median shortfall was $320,000 in 2013, up from $289,000 five years ago. In 2013, the median amount of life insurance coverage families had in place was $220,000 and the amount they said they needed was $540,000. In 2008, the median amount of life insurance coverage in place was much higher at $300,000, and higher needs were reported at $589,000.