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Gap Between Americans’ Perception of End-of-Life Preparedness and Financial Reality

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Talking about death isn’t a popular topic for many Americans. Yet, avoiding important money talks — no matter how difficult or taboo they are — means that families might not be taking care of themselves financially should a member of their household die.

A new survey from San Antonio, Texas-based USAA Life Insurance Co. looks at how civilian and military families in the U.S. prioritize life insurance and end-of-life planning. The findings include a gap between the perception of financial preparedness and the reality when a death occurs.

In fact, 84% percent of military and 74% of civilian respondents think their families would be OK financially if they died. But only 40% of civilian and 27% of military respondents believe their families would be fine financially for more than a year if the primary financial provider died.

Life insurance premiums are seen as too expensive

Nearly half (47%) of respondents feel money is the most important asset someone can leave their family when they die. In turn, 31% view life insurance as the key tool to pass down wealth to family members.

So why aren’t more people purchasing a life insurance policy? It appears to boil down to the perceived price tag of life insurance. Among respondents, 30% of civilians haven’t purchased a policy because they feel it’s too expensive. Meanwhile, 29% of military respondents feel confident they have enough financial resources and don’t need life insurance.

Gender disparity, racial inequality persist

Whether part of civilian or military families, women are at greater odds to have less life insurance than their partner. In fact, 38% of women are less likely to have life insurance than their significant other, compared with 11% of men and their partners. This aligns with a 2021 study from LIMRA that shows 47% of women have life insurance, versus 58% of men.

Further, nearly two-thirds of women (65%) tell USAA they could keep up with living expenses for only five years or less, compared to 51% of men. This isn’t surprising, as women earn 84% of what their male counterparts make, according to 2020 research from Pew Charitable Trusts.

When looking at communities of color, Black (76%) and Hispanic (71%) respondents tell USAA they have a greater risk of struggling with financial instability than their white counterparts (52%) should a family’s main earner die unexpectedly.

If an unexpected death puts a family on financially shaky ground, they can seek financial resources and assistance. For example, the Federal Emergency Management Agency (FEMA) provides COVID-19 funeral assistance.

MIlitary families needing further help can consider military personal loans. While some of these loans are available only to active-duty members, some lenders provide them to families. Civilian families can also consider personal loans if they’ve run out of assistance options.

Methodology: USAA commissioned KRC Research to field an online survey of 2,008 U.S. adults 18 and older. The survey was conducted from July 28 to Aug. 11, 2021. Of the 2,008 respondents, 1,007 were civilians and 1,001 were military.

 

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