SIMSBURY, Conn.,April 28, 2003 - Most Americans with annual household incomes of $100,000 or more lack sufficient life insurance to permanently replace their salaries yet say they have sufficient coverage, according to a new survey commissioned by The Hartford Financial Services Group, Inc. (NYSE: HIG).
The Internet-based survey, conducted by an independent research firm on behalf of The Hartford, found that 64.6 percent of all respondents had less than $500,000 in life insurance and 10.6 percent had less than $100,000 in coverage. Many financial professionals recommend buying a minimum of between seven and 10 times your annual salary to replace your income and adequately protect your family.
"It’s surprising to learn that people with higher incomes – a group that many would consider to be financially sophisticated – are underinsured and overexposed," said Robert Kerzner, executive vice president and director of the individual life division of Hartford Life, a subsidiary of The Hartford. "Many of the people in this income group have more to lose than anyone if a breadwinner should die prematurely."
The Hartford issues life insurance through Hartford Life Insurance Co. and Hartford Life and Annuity Insurance Co.
The survey found that 78.3 percent of the "emerging affluent" purchased life insurance primarily for income protection for their families. Another 9.3 percent secured coverage for estate planning or wealth transfer, 7.5 percent for retirement planning, and 4.3 percent for business planning. Most respondents owned term life insurance (37.3 percent) as compared to permanent coverage (24.8 percent) and many people owned both types of policies (34.8 percent).
More than 38 percent of the emerging affluent did not review their life insurance coverage after a major life event, according to the survey. A major life event was defined as the birth or adoption of a child, marriage or divorce, the purchase of a house or primary residence, graduation from college, or the completion of a child’s education. Sixty-seven percent said they did not review their coverage annually and 6.8 percent reported never reviewing their coverage.
"It’s disturbing that many Americans are not paying close attention to their financial security," Kerzner said. "All of us should take heed of the sudden and unexpected loss of life from the Sept. 11 tragedies. On top of that, 66 percent of our survey respondents report losing 10 percent or more of their investments’ value within the past two years; 9 percent said they lost more than 50 percent of their assets.
"These events should teach us an important lesson: now more than ever, our families need life insurance for financial protection," he said. "Incredibly, few expressed concern in our survey about their coverage gap. A total of 68 percent said they are comfortable with reviewing their coverage as infrequently as they do and nearly 70 percent stated that their coverage is adequate."
Nearly 41 percent reported difficulty in understanding the terms of their policies. The two top reasons for their lack of understanding, respondents said, were the complexity of the policies or the use of unclear language.
"The life insurance industry clearly needs to do a better job of educating the public about the importance of life insurance," Kerzner said. "Life insurance is clearly a unique financial tool that can generate cash through a death benefit when it’s needed the most. We must do a better job of educating people about life insurance. Protecting our families is too important to leave to chance."
The Hartford Financial Services Group, Inc. (NYSE: HIG) is one of the nation's largest insurance and financial services companies, with 2002 revenues of $15.9 billion. The company is a leading provider of investment products, life insurance and group benefits; automobile and homeowners products; commercial property and casualty insurance; and reinsurance.
The Hartford's Internet address is www.thehartford.com.
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Life insurance products are issued by Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company. Variable universal life products are underwritten and distributed by Hartford Equity Sales Company, Inc. For more complete information about variable universal life products, obtain a prospectus from your financial advisor. Please read it carefully before investing or sending money.
Neither The Hartford nor its agents or employees provide tax or legal advice. As with all matters of a tax or legal nature, your clients should consult their own tax or legal counsel for advice.
Certain statements made in this release should be considered forward looking information as defined in the Private Securities Litigation Reform Act of 1995. The Hartford cautions investors that any such forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors are directed to consider the risks and uncertainties in our business that may affect future performance and that are discussed in readily available documents, including the company’s annual report and other documents filed by The Hartford with the Securities and Exchange Commission. These uncertainties also include: the possibility of less favorable loss activity than anticipated; the response of reinsurance companies under reinsurance contracts; the possibility that actual and anticipated asbestos liabilities might be greater than currently estimated; general economic and business conditions that are less favorable than anticipated; changes in interest rates or the stock markets; stronger than anticipated competitive activity; unfavorable legislative, regulatory or judicial developments; and more frequent or severe catastrophes than anticipated. The Company assumes no obligation to update this release which speaks as of the date issued.
