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Financial Literacy - Insurance
POLL
National poll results
Many say it's essential, and just as many that it is a necessary evil. Surprisingly few say insurance is a waste of money.
Understanding insurance needs

Are Americans insurance-savvy?

The results revealed that different age groups have different insurance priorities. Folks older than 50 were more likely to cut life insurance out, while those younger than 50 were more likely to drop disability first. "This reversal is probably explained by the fact that those over 50 are not likely to have young children dependents, which is a primary motivator for life insurance. They are also more aware of the importance of a continued source of income to fund retirement with little remaining time to do so," says Professor Graves.

Insurance priorities by age

People with annual incomes higher than $30,000 were more likely to drop disability insurance. Graves says this is most likely because they are putting a higher priority on life insurance if they have dependents. 

Reactions to unusual insurance
With the prevalence of identity theft in the news, it may come as no surprise that 63 percent of Americans believe ID theft insurance to be a savvy investment.

Unfortunately, people may be paying for coverage they already have.  "Many people who buy identity theft insurance do not realize that they have coverage through their homeowners' policy," says Okumura.

"The big exposure to loss comes in two places: damage to your credit rating (which insurance cannot remedy directly) and costs associated with cleaning up the mess the identity thief has created," he explains. "But on the latter, the FTC reports that the median amount paid was $259 (only $9 more than a $250 deductible). In addition, 84 percent of the amounts paid were less than $1,000 and only 4 percent exceeded $5,000. Granted, this does not account for lost wages. Lost wages and legal fees would be the main reasons for buying this type of insurance. Otherwise, time and money would be better spent in securing one's identity from identity theft."

-- Posted: Aug. 20, 2007
 
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