Who buys more life insurance, Rich or poor people?

Question

Can anyone have any data that shows rich or poor people buying more than others. Some people say rich people don't need a lot of insurance, poor poeple does, but I like to see the data showing that who was buying more than other.

Answer 1

Oh, there isn't any data, I'm sure, as "rich" usually means, "someone with more money than me".

But wealthy people tend to be good money managers, or they don't stay wealthy long. Insurance is a financial tool, to help maintain your solvency. People with good money management skills will use tools to help them retain their funds, and people with poor money management skills won't.

So although technically, "rich" people might not "need" insurance like poor people, they are MUCH more likely to buy it, as poor people don't bother to learn money skills - and tend to remain poor throughout their lives.

Want an example? Look what happens to lottery winners. Five years after winning, the vast majority are broke again. Rich people don't BUY lottery tickets, because it's poor wealth management, and they understand that.

Answer 2

It depends. More poor people buy insurance because a loss of income to a poor family would be devastating. Wealthy people really don't buy insurance because when you're wealthy and have investments in place and are living off interest of your investments, then the income is not lost if a spouse dies. All insurance does is protect a loss of earned income not a loss of life. A rich person would only need life insurance if they own a business or they have insurance on a key employee. If a spouse can't run their partner's business alone, or if an employee's death would be devistating to your business, then a rich person would purchase insurance.

Answer 3

Poor people can't afford insurance. Middle class probably by the most, as they can afford minimum/medium coverage and are the majority in numbers. Middle/Rich people not only buy insurance, but larger amounts of coverage. Probably the super Rich don't bother--for any amount of coverage they would be interested in, the premiums would be ridiculous.

I would think most input for insurance comes from struggling to be middle class/ middle class/ and slightly higher only income groups of people. The poor cannot afford it, The rich invest in something with a better return:)

Answer 4

Well how i see it, rich people don't buy insurance much. My parents refuse to get full coverage insurance, I got into a car accident before when i was sitting with someone else and my parents had to pay more then $10,000 just for the hospital bills, and after that, they still won't buy insurance. And i noticed a lot of my friends don't have any insurance either so in my own opinion, i think people form the lower classes purchase more insurance. Or they probably get insurance from they're jobs while my parents have to cover all their employees insurance.

Answer 5

Hi, your friendly insurance guy here again!

A few quick points on prior posted answers:

Insurance companies absolutely DO ask for income levels. Every application I've ever helped a client complete has required it.

Poor people CAN afford life insurance, just not as much of it as rich people can.

The poster who said that rich people don't need insurance is off the mark.

The poster who said that the amount desired by rich people would have "ridiculous" premiums is wrong. "Ridiculous" is a relative thing. If a wealthy person earning hundreds of thousands of dollars or moe annually can pass that wealth to his or her heirs without probate, estate or income tax, it is not ridiculous at all for them to pay $50,000 annually for life insurance. I've seen it happen lots of times. It all depends on your point of view.

MCBRATZ17, who is one of the most reliable responders here, is right on - INsurance is ai financial tool. The wealthy tend to use it MUCH more heavily than others.

All that being said, it comes down to this: There are fewer wealthy people than middle class and poor people. Thus, the number of life insurance contracts in force on them is smaller. the total amount of life insurance per insured person will tend to be enormously higher for rich people. They can afford the higher premiums and have much greater tax worries to deal with then the poor and middle classes.

Answer 6

There is really no data since life insurance companies don't discriminate people base on income. Logically, it would make sense if the people with low income purchases life insurance more often than wealthy people. Though, low income class can't afford as much coverage and are usually ignored by insurance agents. Wealthy people only buy it if they want to leave something extra and they usually buy coverage of a million or more.

I believe the middle income class purchases life insurance more often than low income families and wealthy income families.

Answer 7

The people that should buy insurance should be people who cannot afford to lose that value when the situation occurs. IIt doesnt matter rich or poor. If you have nothing much to lose why buy insurance. If you can afford to lose, why pay the premiums for that off chance that it might happen

Answer 8

Rich, its one of the few tax shelters left.

If someone has an estate worth 10 million. Its possible to turn the whole thing into a non taxable event if they just buy life insurance to offset the tax burdon.

Its also useful for businesses where there are partners. You create buy-sell agreements and back them up with life policies. That way you dont have to worry about shutting the whole company down because a partner died.

Both of the above examples could be multiple millions of dollars in Death Benefit for life insurance.

Poor people in general, dont like any insurance they have to pay for. If its free then great, but pay for it, they hate it.


MR Do the right thing: "There is really no data since life insurance companies don't ask for income"

You are completely off base on that comment. They require and verify income on large policies and on small ones they require you write in what it is. Dont make up facts

Answer 9

Neither. Middle class purchases more life insurance than anyone of them. The majority of the market in USA is middle class.

Answer 10

Here's a word substitution exercise for Sad Soul, who doesn't seem to grasp the concept of cash value:

" *Homes* with *equity* don't pay out *equity* when you *sell*! They say its a good way to build savings! How is that so if you lose it all and it doesn't go to anyone when you *sell*? People say you can borrow it. Why do I want to borrow my own money that I paid for? *Equity* = scams!"

Why would anyone buy a house if they pay all that money into equity and all they get when they sell is the value of the home? Why would anyone want to borrow equity from their home? All they're doing is borrowing their own money.