U.S. workers face a big life insurance awareness gap, LIMRA warns

The fact that one-quarter of workers who have life insurance benefits at work don't know it is one of many examples of why an awareness campaign is needed, LIMRA analysts say.

"Employers and the [benefits] industry must increase their efforts to educate workers about their life insurance benefits," LIMRA says.

The backdrop: Low U.S. consumer insurance literacy levels have long plagued efforts by LIMRA and other organizations to raise awareness and education. In fact, many survey participants who have no disability insurance or long-term care insurance report having those products.

Analysts at Cigna have estimated that workers' low level of health insurance literacy leads to hundreds of billions of dollars in avoidable health care spending each year.

Awareness gap details: The life insurance benefits awareness gap is even bigger at smaller employers, according to LIMRA data.

At employers with 1,000 or more employees, 71% of the workers have group life benefits or other life insurance benefits, and 59% report having life benefits, leaving a 12-percentage-point awareness gap.

But at employers with fewer than 100 employees, only 43% of the workers have life insurance benefits, while only 28% of the employees report having life benefits.

That means that the workers at the small employers have a 15-percentage-point life benefits awareness gap. Only 65% of the workers at those employers who have life benefits are aware of that fact.

What it means: For employers, a lack of employee life benefits awareness means a lost opportunity to use the benefits as a key recruitment and retention tool.

For employees, lack of awareness could lead to all-too-common scenarios where families must resort to crowdfunding campaigns to pay for funerals, or fail to file claims for life insurance death benefits for policies that they don't know exist.