More Help For The Middle Class

[IMPACT+: This series features IMPACT posts that take a longer look at vital financial security topics that affect American consumers.]

America’s middle class keeps getting squeezed.

The percentage of middle-class Americans has been steadily declining for decades. About half of U.S. adults (52%) lived in middle-income households in 2018, according to the most recent analysis by the Pew Research Center. That is down from 61% in 1971.

The COVID-19 pandemic piled additional burdens on the middle class, including forcing families to juggle their home and work responsibilities with the demands of remote schooling. Others lost their jobs or tragically lost their loved ones.

The challenges that middle-class Americans face are not easy to solve. As public policymakers seek solutions that provide greater financial security and stability for families nationwide, the life insurance industry fits into efforts to build and strengthen the middle class. Life insurance companies’ most critical mission is helping people take care of those they love. And the value of what life insurance companies offer has never been more important.

The life insurance industry serves 90 million American families with essential financial protection products including:

• Life insurance – A fundamental tool for financial resilience, helping families keep their homes, handle ongoing expenses and pay for education after a tragic loss. It also can promote intergenerational wealth transfer in middle-income America, supply policyholders with an invaluable source of funds when times are tight, and provide valuable support in so many ways for small business owners.
• Private-sector retirement solutions – Annuities address a prime concern for many Americans –  running out of money in retirement – by providing guaranteed income for life, like a traditional pension. Annuities, 401(k)s and IRAs allow workers to save and supplement Social Security in retirement.
• Long-term care, disability income insurance and paid family medical leave – They provide vital protection for families and caregivers. According to the Social Security Administration, almost 1 in 4 of today’s 20-year-olds will become disabled before reaching age 67. About 70 percent of Americans aged 65 and older will need long-term care at some point in their lives. Currently more than 47% of full-time workers (61.8 million) receive paid medical leave benefits through the private sector.
• Supplemental benefits – These financial protection products, including dental and vision insurance, are provided through employers or offered on an individual basis, and provide valuable benefits against expenses not covered by major medical insurance.  

Whether by helping small businesses provide sick leave, making sure college tuition gets paid, or providing financial protection for unexpected expenses, life insurance companies have the tools and know-how to help the middle class.

We also support policies that create more savings options for retirement savers. That’s why we support the Best Interest standard of care for annuities, which protects consumers by requiring financial professionals offer savings recommendations that address the distinctive situations of individuals and families, rather than their own financial interest.

Most annuities are sold on a commission basis, which provides greater access for middle- and lower-income savers who may not be able to afford an ongoing fee for financial advice. Fee-based service typically requires assets greater than $100,000 to access.

Everyone should havethe right to choose who they work with to save for retirement. And everyone should have options for how to pay for these services. A Best Interest standard preserves those choices for consumers. It also preserves access to annuities, which are critical tools for middle- and lower-income savers to secure retirement savings along the lines of a traditional pension, providing guaranteed income for life.

Middle-class American families have been getting squeezed for too long. Working together with policymakers, the life insurance industry is committed to  the middle class and helping all Americans protect their family’s financial future.