People who identify as lesbian, gay, bisexual, transgender and homosexual (LGBTQ) are underinsured for life insurance coverage, a position that finance professionals say leaves their families in greater financial security at risk.
Key points to remember
- LGBTQ Americans have less life insurance coverage than the general population, according to a new LIMRA survey.
- Only 38% of LBTQA adults surveyed report having life insurance coverage, which is 7.6 million out of 20 million adults. Overall, half of Americans own life insurance.
- 43% of LBTQA consumers are more likely to purchase life insurance in the next year, compared to 37% of the general population.
- The Covid-19 pandemic has prompted one in five LGBTQ consumers to purchase life insurance, not just think about it, at a higher rate than the general population.
- Finances in general remain a big concern in LGBTQ populations 48% of respondents worry about what will happen to them if they get sick or injured, but only 14% say they have disability insurance.
Owning an LGBTQ life insurance policy lags the general adult population
LGBTQ consumers have a life insurance ownership rate of 38%. This rate is lower than the rate for all consumers, which is set at 50%, on the basis of a survey conducted and to analyse by Connecticut-based LIMRA and its affiliated nonprofit organization, life happensreleased this week.
Yet the disparity in life insurance coverage is worrying. LIMRA said in a press release that 68% of LGBTQ people surveyed think they should own life insurance. If the family’s primary breadwinner died, 45% of people making financial decisions in LGBTQ households agreed that their family would face financial hardship within six months, while 30% believed they would face hardship in just three months.
The pandemic has triggered an increase in life insurance take-up among LGBTQ consumers
Although LGBTQ Americans are less likely to own life insurance policies compared to the general population, they said the Covid-19 pandemic has prompted them to purchase life insurance at a higher rate than the general population. market segment of the general population, according to a recent life insurance survey. professionals. Despite their lower insured status, one in five of those LGBTQ consumers surveyed said the Covid-19 pandemic prompted them to purchase life insurance, five points higher than the general population, LIMRA said.
The LGBTQ community is already planning future financial coverage
Despite their lower coverage rate, more than a third of participants in the LBTQ survey say they work with a financial professional, while another 26% plan to consult one. A financial advisor, however, could focus on retirement planning and the investment desires and concerns of respondents.
Next year there might be more turnout. According to LIMRA, 43% say they are likely to buy coverage in the next year, compared to just 37% of the general population.
With 20 million American LGBTQ adults in the United States, a coverage rate of 38% represents 7.6 million adults. Of those surveyed, half, or 10 million people, said they needed coverage or in fact needed more coverage.
Multiple Financial Concerns Barrier Faced by LBTQ Consumers
The reasons given by LGBTQ respondents for not buying life insurance stem from the perception that it is too expensive and that it competes with other financial priorities, according to LIMRA. In addition, the LGBTQ population earns less and has a harder time covering expenses, according to reports cited by actuaries.
The areas in which LGBTQ respondents put their money for financial planning purposes reveal heightened financial worries. LIMRA found that LGBTQ Americans are more likely to reveal worries about finances in many areas compared to the general population.
These concerns include supporting themselves after a disability or injury and having enough money on hand for an emergency. Paying monthly bills, adequacy of retirement funds, credit card debt and mortgage on their home also topped the list of financial concerns for LGBTQ consumers. Other financial concerns include paying for a child’s education and burial and funeral expenses.
Less than half, but a sizable number – more than a third to almost half – of LGBTQ respondents have financial concerns about illness, injury, disability and long-term care services, but LIMRA has found that three quarters had overestimated the cost of life insurance.
Many LGBTQ consumers go online for financial planning
The organization says lack of knowledge remains a barrier for the LGBTQ market, as well as others. The LIMRA survey found that only a quarter of LGBTQ Americans felt well informed and aware of life insurance. However, the Internet is a resource and a transaction center for many when seeking information.
LIMRA also found that LGBTQ consumers are significantly more likely to purchase life insurance online (41%) than the general population market, which turns to the internet to place life insurance about 30% of the time.
The LGBTQ community is taking to social media to learn more about financial products, citing YouTube, Facebook and Instagram as their top platforms. The surveyed community that identified as LGBTQ, however, is younger, as Generation Z adults (current Gen Z adults were born in 1997-2004) are twice as likely to identify as LGBTQ as millennials (1981-1996) and four times as likely as Gen X, according to LIMRA.
The online panel interviewed adult consumers who are financial decision makers in their household and LIMRA analyzed the responses to show market segment trends.