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The life insurance generation gap

By Maryalene LaPonsie on September 22nd, 2012

Consumers from each generation have different motivations when it comes to buying and maintaining life insurance coverage, according to a recent poll conducted on behalf of insurance company Northwestern Mutual.

"The differences between the generations further underscore that the opportunities and risks people face change over time, as does what it takes for them to feel secure," said David Simbro, senior vice president for Northwestern Mutual, in a written statement. "Young people focus on building wealth and paying down debt, while those heading into retirement are concerned with managing their longevity risk."

Young adults want to protect loved ones

Most people between the ages of 18 to 34 who own life insurance bought coverage to provide for their loved ones. More than one in four policyholders in this age group purchased coverage after the birth of a child.

When shopping for life insurance, 27 percent of young adults factored in education costs to determine how much coverage to buy. Thirty-five percent said they have peace of mind knowing their debts can be paid should they die.

Only 10 percent of young adults planned to use their death benefit as a gift for charity or or to leave an inheritance.

More emphasis on income replacement in mid-life

Like young adults, middle-aged consumers said they took comfort knowing their life insurance would benefit their family. The poll found 34 percent of those ages 35 to 44 and 36 percent of those ages 45 to 54 had the greatest peace of mind knowing their family would be provided for after an unexpected death.

Forty percent of those 45- to 54-year-olds factored in their mortgage when shopping for life insurance quotes, and 38 percent of 35- to 44-year-olds considered income replacement.

Among buyers ages 45 to 54:

  • Thirty-nine percent said marriage motivated them to buy life insurance.
  • Twenty-five percent said homeownership prompted the purchase.
  • Twenty-five percent said they bought coverage as part of retirement planning.

Older Americans concerned with retirement

While younger adults buy life insurance to provide for their families, people 55 and older purchase coverage with an eye toward retirement. Thirty-one percent of those 55 and older with life insurance said knowing they will have money for retirement provides the greatest peace of mind.

Despite the different needs of each generation, the Northwestern Mutual poll highlights the many uses of term life and whole life policies.

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