A new study from the US published by Investopedia has revealed that those self-identifying as lesbian, gay, bisexual, transgender, and queer (LGBTQ) are underinsured when it comes to their financial protection.
As an example, the study found that LGBTQ consumers have a life insurance policy ownership rate of 38% – lower than the rate for all consumers, which stands at 50%.
So why do those identifying as LGBTQ+ have less financial protection? And how can you ensure you and your loved ones receive financial support if the worst happens? Read on to find out more.
Almost half of LGBTQ+ households say they would struggle without the main wage earner
Protection such as life insurance, Critical Illness cover, and income protection is designed to provide financial support at a difficult time. It can replace income, help you to repay debts, or ensure you and your loved ones can maintain the same standard of living.
So, the disparity in life insurance coverage for the LGBTQ+ community is a concern.
The study revealed that 68% of American LGBTQ+ individuals surveyed think they should own life insurance.
Additionally, if the primary wage earner in the family died, 45% of those making financial decisions in LGBTQ households acknowledged their families would struggle financially within six months. Almost a third (30%) felt they would face hardship in just three months.
“It’s too expensive and I have other financial priorities”
The reasons given by LGBTQ respondents for not buying life insurance stem from the perception it is too expensive and that it competes with other financial priorities.
“It’s too expensive”
More than a third of LGBTQ respondents have financial concerns around illness, injury, disability, and long-term care services, but the study found that three-quarters had overestimated the cost of life insurance.
This echoes research carried out by Legal & General who found that 92% of millennials overestimated the cost of life insurance for someone aged 30.
The UK insurer asked millennials to guess the typical monthly cost of a life insurance policy to cover a 30-year-old non-smoker with a cash sum of £100,000 for 30 years.
The median guess by millennials was £23 a month, while 1 in 4 respondents gave an estimated cost of more than £50 a month.
It would actually cost around £7.30 a month for a 30-yearold non-smoker to take out a 30-year level term life insurance policy for £100,000 from Legal & General.
Both these pieces of research suggest that many don’t have a grasp of how much cover could cost them if they were to take it out to protect their loved ones.
However, the truth is that financial protection is often cheaper than you think. It’s possible to cover yourself and protect your family for just a few pounds every month, giving you valuable peace of mind.
As we’re an independent broker, we can scour the market and find the best price for the cover you need.
“It competes with other financial priorities”
Legal & General also looked at the reasons why people didn’t take out financial protection.
They found that the number one reason millennials (who are twice as likely to identify as LGBTQ+ than Gen Z, according to Investopedia) don’t have life insurance is that they feel it’s a lower priority than other expenses.
4 in 10 said that they either don’t want the additional expense of a monthly life insurance premium or that it’s too far down their list of priorities to add it to their outgoings.
Expenses that millennials consider more important than financial protection include their phone bill, saving for holidays, entertainment subscriptions, dining out, clothing, and travel insurance.
While you may have other pressing financial priorities, it’s important to remember what this valuable protection is designed to do, and the reassurance it can provide.
- Life insurance pays a lump sum to your chosen beneficiaries on your death. It can enable your family to pay their mortgage or rent so they can stay in your home, pay essential bills, and help them to maintain their standard of living.
- Family income benefit pays a tax-free monthly amount on your death. It’s ideal if you have young children and you want to ensure that they can have the future you envisaged for them.
- Critical Illness cover pays a tax-free lump sum if you’re diagnosed with a serious illness such as cancer or a stroke. It means you can take time off work and pay your bills at a stressful time, enabling you to focus on your recovery.
- Income protection replaces some of your income if you were unable to work due to illness or injury. It’s a valuable safety net that means you won’t have to dip into your savings or rely on Statutory Sick Pay if you can’t work.
It’s likely that you already insure your car, home, pet or even your mobile phone. So why not think about insuring your most valuable asset of all – yourself?
Pandemic has prompted more LGBTQ+ individuals to take out financial protection
While the research found that LGBTQ+ Americans are less likely to hold life insurance policies compared with the general population, respondents said that the Covid-19 pandemic spurred them to buy life insurance at a higher rate.
Despite their lower insured status, one in five of the LGBTQ consumers surveyed said that the Covid-19 pandemic drove them to buy life insurance – five points higher than the general population.
The last couple of years have shown us that ill health can happen at any time. Many millions of people in the UK have been forced to take an extended period off work, while (as of the end of June 2022) more than 180,000 people have tragically died as a result of Covid-19.
If you’re worried about your ability to maintain your regular outgoings in the event of ill health or an accident, or you want to make sure your loved ones are financially supported if you pass away, get in touch with us now to find out how we can help.
LGBTQ+ consumers heading online to buy financial protection
One of the positive outcomes of the research reported by Investopedia was that LGBTQ consumers are a lot more likely to buy life insurance online.
Around 2 in 5 are likely to use a web-based service to find cover, compared to the general population where 3 in 10 look to the Internet to place life insurance.
There are many benefits to using an online service such as I’m Insured to find the cover you need:
- We can scour the market for you and check the price of cover with dozens of the UK’s leading insurers. It means you can be confident you’re getting a great price for cover
- You can read the reviews from our customers – we’re rated 4.9 out of 5 on Feefo
- You can read about your various options and access useful guides and resources
- You can get a quote for the cover you need in just a few minutes.
We work with consumers from all backgrounds – including many from the LGBTQ+ community – and so we can help you get the valuable peace of mind you’re looking for.
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