NEW YORK--(BUSINESS WIRE)--
Today’s 20- and 30-somethings are acutely aware of the serious financial obligations they face and feel strongly about not placing undue financial burden on their parents, spouses or partners should anything happen to them, according to survey results recently released by LearnVest and The Guardian Life Insurance Company of America (“Guardian”). The survey, entitled Life and Disability Insurance: What 20- and 30-Somethings Think, revealed that that this generation is also woefully uninformed about how to address these concerns.
“The results of this study clearly underscore the need for practical, real life financial literacy and empowerment. We need to address this earlier in our schools, and more often throughout people’s lifetimes,” said Deanna Mulligan, Chief Executive Officer of Guardian. “There is a serious gap between the expectations of this audience and the reality they face, particularly when it comes to insurance. By filling these information gaps, we can empower young adults to take control of their financial future and reduce the possibility of placing undue financial burden on their loved ones.”
Mulligan added that Guardian will be launching a financial literacy pilot curriculum at community colleges aimed at empowering students to better address their financial needs.
Alexa von Tobel, personal finance expert, CEO and founder of LearnVest.com added, "At LearnVest, we want to make sure young adults in their 20s and 30s are making smart decisions about their money in order to build a solid financial foundation. Insurance plays an important role in financial security and we need to help young people better understand their needs so they can protect themselves from unexpected curveballs.”
Most 20- and 30-somethings get an “F” in Insurance 101:
Insurance products play an important role in even the most basic financial planning. Ninety-three percent of respondents acknowledge that insurance is important; however, most lack a basic level of literacy when it comes to insurance in general and even their existing coverage.
- Sixty percent of respondents don’t understand the difference between term life insurance (which provides protection for a specific period of time) and permanent life insurance (which provides lifelong protection).
- Thirty percent don’t know what type of insurance they actually own, and 19% don’t know how much their policy would pay out.
- Fifty-nine percent of married/partnered respondents know that their significant other has coverage but, of those, 35% have no idea what type. Of even greater concern, nearly 1 in 5 of married/partnered respondents reported that they don’t need to worry about getting their own insurance because their spouse is covered, and that should be enough for them, too.
Assets are not protected:
There is a similar disconnect with disability insurance, which provides an income if you are unable to work because of illness or injury. While young adults place a high value on their ability to earn an income – particularly in an uncertain economy, with less than half (47%) of survey respondents having an emergency fund in place – the majority have not taken steps to protect this asset.
- Only 35% have disability insurance (compared to 57% for life insurance).
- Among those who do not own this coverage, the main barriers cited were cost (25%) and the belief that they don’t have any physical risks at their jobs to warrant such a purchase (21%).
According to the Council for Disability Awareness, just over 1 in 4 of today’s 20-year olds will become disabled in some way before they retire. And, contrary to what survey respondents assume, freak accidents are not usually the culprit. Back issues, cancer, heart disease and other illnesses cause the majority of long-term absences.
Information needs to be more accessible:
In contrast with their high level of engagement with other financial decisions, young adults readily admit their aversion to shopping for insurance – 30% would rather get their teeth cleaned and 25% would rather clean out their refrigerator than go through the process of researching and purchasing insurance.
- Less than a third (27%) would turn to a professional for guidance in order to choose the right insurance policy. Instead, the majority prefers anecdotal information from friends and family, or relies on searching the internet.
- Of those who already own insurance, 32% didn’t consult any source – human or digital – for information before making their purchase.
More insights from Life and Disability Insurance: What 20- and 30-Somethings Think may be viewed here.
The survey sample consisted of 797 respondents 21 to 40 years of age with an annual household income of more than $30,000. Respondents were divided into four age groups, each of which represents 25% of the sample. Each age group was further weighted so the male/female balance was 50/50. Of the 797 respondents, 190 were current LearnVest subscribers who were recruited via e-mail from the company database. Responses were collected online via a 25-minute survey conducted between October 10 and October 21, 2012.
A mutual insurer founded in 1860, The Guardian Life Insurance Company of America and its subsidiaries are committed to protecting individuals, business owners and their employees with life, disability income and dental insurance products, and offer funding vehicles for 401(k) plans, annuities and other financial products. Guardian operates one of the largest dental networks in the United States, and protects more than six million employees and their families at 115,000 companies. The company has approximately 5,000 employees in the United States and a network of over 3,000 financial representatives in more than 80 agencies nationwide. For more information about Guardian, please visit www.GuardianLife.com.
LearnVest is a unique personal finance platform that combines accessible content, best-in-class online tools and, through its subsidiary LearnVest Planning, provides high-quality, fee-based financial advisory services delivered by Certified Financial Planners™. LearnVest Planning, a registered investment advisor, is redefining the traditional financial planning market with a dynamic, technology-enabled service that gives clients nationwide constant access to financial experts. Since launch, LearnVest has raised more than $25 million in venture financing (led by Accel Partners) and has been awarded numerous accolades, including one of Time’s 50 Best Websites of 2011 and back-to-back Best of Show awards at FinovateFall 2011 and 2012. For more information about LearnVest, please visit www.LearnVest.com.