Ignoring life insurance?

By now, most husbands and wives have probably booked dinner reservations and scheduled couple’s massages for Valentine’s Day, but have they bought each other life insurance policies yet?  While pondering your eventual death is admittedly not the most romantic of pastimes, securing life insurance for your loved ones to protect them should your life prematurely end is undoubtedly an act of commitment and responsibility.  So, when comparing census marriage data to insurance industry statistics, don't you predict higher ratios of life insurance policies to population in states with higher marriage rates? I do. (Bad pun.)  Bankrate compared the U.S. Census Bureau 2009-2011 American Community Survey 3-Year Estimates with the American Council of Life Insurers Fact Book 2012. Their findings were different than I would have predicted:  The top states for marriage were not the top states for life insurance, and the top states for life insurance placed lower in marriage rankings than one might expect.  Utah had the highest percentage of married couples, with 57 percent of people aged 15 or older having tied the knot. On the flipside, with 2.03 million residents owning only 783,000 individual life insurance policies in 2011, Utah had a policies-to-population ratio of 38.5 percent, the seventh lowest in the nation.  Idaho, Wyoming, Iowa and Nebraska also ranked among the top five states with the highest marriage rates. Notice something these states might have in common? Utah, Idaho and Wyoming are densely populated by followers of the Mormon Church, which places extreme importance on matrimony. So, one might speculate that the Mormon population of these states explains the high marriage rates, but what might explain such low ratios of life insurance policies?  Steve Miller, the owner of an insurance and financial services agency in Provo, Utah, said he was surprised by this data, noting, “The (Mormon) church has long emphasized the importance of life insurance in (its) teachings and encouragement of provident living and self-reliance.”

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But Julie Hanks, author and owner of Wasatch Family Therapy in Salt Lake City, argues that “life insurance is not going to be a big priority while you’re young and tight on resources… those are things like rent, food and tuition.”

She might have a point. Utah, Idaho and Wyoming might have the highest marriage rates, but they also have the youngest medium ages at which women marry: 23.2 years in Idaho, 23.3 in Utah, and 24.2 in Wyoming. These young married couples might start off struggling financially, or their younger ages could hinder acceptance of their life insurance applications.

Was there something similar about the states with the highest rates of life coverage? Ya’ll tell me. Leading the pack is Alabama, with 5.33 million life insurance policies among a population of 3.85 million. That’s a coverage rate of 140 percent. Louisiana, Mississippi, South Carolina and the District of Columbia also ranked among the top five states with the most life insurance.

A FoxBusiness article claims that the abundance of life policies in the South is due to “burial policies,” so-called industrial life insurance policies that were typically sold door to door to help with burial costs and were quite popular in Southern regions in recent decades.

American Council of Life Insurers spokesman Jack Dolan said, “Consumers in the old days often purchased more than one such policy.” Chuck Bracewell, vice president of the Life Insurance Company of Alabama, owns more than one insurance policy himself, and adds his own speculation to the mix: “Let’s say Southern folks are very family-conscious.”

Being family-conscious, oddly enough, was also suggested as the reason behind why states with a high Mormon population were also the leading states for marriage rates. But the Southern states with the highest rates of life insurance ranked low on the matrimony totem pole: Alabama, at the top of the list for life coverage, came in 32nd in marriage rates.

It’s a strange bundle of statistics, and it doesn’t seem clear whether there’s a causal relationship, correlation or mysterious independent variable affecting either marriage rates, life coverage, or both. One nebulous conclusion I can make is that love is at the core of the two, something with which chairman of the Life and Health Insurance Foundation for Education Stephen Rothschild agrees.

“The only reason to purchase life insurance is because you love someone,” Rothschild says. “It seems a lot less superfluous and much more lasting than a box of chocolates or a dozen roses.”