Single Mothers Can Be Lucrative Market

Do you know that most single mothers are not teenagers? According to the U.S. Census Bureau, more than 80 percent are at least 25 years old. Further, more than half of all single mothers have been previously married, with nearly all of these marriages ending in divorce. And, while many do earn low incomes, a fourth earn incomes of at least $50,000 annually, placing them solidly in the middle class.

LIMRA recently conducted an online survey of 1,500 single mothers aged 25-64 who considered themselves the primary wage earners in their families.

This survey found that almost two-thirds of single mothers own some type of life insurance—37 percent own individual life insurance and 46 percent are covered by group life insurance. Among those single mothers who earned incomes of $50,000 or more, close to 90 percent own a type of life insurance, with almost half owning individual life insurance. However, most of these insured single mothers are underinsured, and LIMRA’s survey shows that 60 percent of insured single mothers believe that they should have more life insurance.

When asked how their families would survive financially in case of the single mother dying, two-thirds named their proceeds from their life insurance coverage, and half mentioned Social Security payments. Further, when asked why they hadn’t bought life insurance or hadn’t increased their coverage, most felt that they had other financial priorities such as saving for their children’s education or their own retirement, and felt they could not fit life insurance costs into their budgets.

So, how can financial professionals (including insurance agents) interested in serving this particularly vulnerable segment be more effective in reaching out? 

Here are some suggestions:

 • Convey the costs of life insurance to all. Many single mothers believe that the costs are too high for them to afford. In reality this may not be the case—often, people overestimate these costs.

• Initiate discussions about how families would survive in case of the mothers’ deaths. Perhaps, provide some guidance on how to quantify Social Security survivor benefits and all their savings (since these are often mentioned as sources of support for the surviving family members). Such discussions may result in some single mothers reevaluating their decisions not to buy life insurance (or not to increase their coverage).

• Help single mothers gain insight into to meet with you. Be sensitive to the fact their own budgets. Single mothers are that single mothers are incredibly busy acutely aware of their financial vulnerability. LIMRA found that most tend to base their coverage purchases on the amounts they believe they can afford, which explains why so many are under-insured. By gaining more knowledge about their incomes and expenses, single mothers can decide whether they can increase their coverage.

• Offer to review the life insurance coverages and finances of your single-mother prospects. Some single mothers may never have had such a review; others may have had a review many years earlier, perhaps when they were married.

 • Be proactive in reaching out to single mothers and indicate your affordability. While single mothers know they need life insurance and prefer to purchase life insurance through personal meetings with financial professionals, 70 percent believe that they cannot afford professional financial advice. Even among single mothers earning $75,000 or half believe that these fees are too high to afford.

Do not ignore the reach and effectiveness of word-of-mouth referrals. Superior service, going out of your way to provide financial education or showing where to get unbiased financial education can go a long way in satisfying your current single-mother clients, who could serve as referrals to widen your reach.

Make it convenient for single mothers to meet with you.  Be sensitive to the fact that single mothers are incredibly busy and may not always be able to find some one to take care of their children.

Single-mother households are a growing segment of the population—there are nearly 10 million U.S. households with children under 18 led by single mothers. As we celebrate Life Insurance Awareness Month, I urge all producers to find ways to reach out to this vulnerable population and help them protect their loved ones.

Nilufer Ahmed , senior research director of LIMRA’s Market Research, is responsible for conducting research related to unique markets (e.g., women, Hispanics, African-Americans and Asian-Americans).

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