Fewer Americans have life insurance

The number of Americans with individual life insurance policies is at its lowest level in 50 years, and 30% of Americans have no life insurance at all.

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The figures come from the "Trends in Life Insurance Ownership" study, which the industry group LIMRA conducts every six years. This year's survey reports that the percentage of households with life insurance has declined since 2004, from 78% to 70%. Of the 35 million American households without life insurance, 11 million include children under 18.

Robert Kerzner, president and CEO of the industry group, blames the economy:

Clearly, more American families are living on the edge -- surviving paycheck to paycheck -- and, as our new study suggests, too many without the safety net that life insurance provides. The numbers tell a grim story. Today, there are 11 million fewer American households covered by life insurance compared with six years ago. A majority of families either have no life insurance or not enough, leaving them one accident or terminal illness away from a financial catastrophe for their loved ones.

The loss of jobs, plus companies scaling back benefits to employees, has contributed to the decline in insurance for families, Leslie Scism at The Wall Street Journal noted, in a report about the survey. In 2004, one in three households relied solely on employer-provided life insurance. Today, that number is one in four.

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According to the industry survey, many Americans -- 58% -- believe they need more life insurance. Of the households with children under 18:

• 40% say they would have trouble paying living expenses immediately if the primary breadwinner died.
• 30% more say they would have trouble paying the bills after a few months if the primary breadwinner died.

The WSJ attributed the decline in insurance coverage not only to the economy, but also to the insurance industry itself.

Prices of term life-insurance policies have dropped in recent years amid competition, but other types of insurance remain expensive to many middle-income consumers, and they often are put off by the hardball tactics of commission-paid sales agents. The industry also is grappling with a decline in the number of agents who sell to middle-class families, often described as those with household incomes of between about $35,000 and $100,000 a year.

Trent Hamm at The Simple Dollar has a concise guide to buying life insurance without busting your budget. His advice includes evaluating the advice you get from insurance sales professionals with skepticism:

Insurance salesmen will almost always come after you with a great pitch about some insurance-related product different than the basic policy you want. Let them ramble, but remember that you're not hearing about the large cut they take from selling you this policy. Ignore it -- or, if you must, take the information and actually research it extensively on your own. Don't let them sell you something you don't need.

Jeff Rose at Good Financial Cents has further advice on getting the best rates for term life insurance, which is recommended over whole life policies for most people. It's also much cheaper. He suggests starting your research by getting quotes online.

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Even if you already have life insurance, you might want to shop around and see whether you can get a better deal, MSN Money columnist Liz Pulliam Weston suggests. You can use the MSN Life Insurance Needs Calculator to figure out how much insurance you need.

Not everyone needs life insurance, of course, and the survey did not indicate how many of the households without insurance were made up of single people with no dependents, who often don't need life insurance.

For those people, as well as for parents with dependents, disability insurance might be a better investment, Adam said in a guest post at Frugal Dad. He writes:

Many people argue that having disability insurance is more important than life insurance. The main reason for this argument is that for a 30-year-old male, you are four times more likely to become disabled than die.

More from MSN Money:

• How to find lost life insurance policies
• 5 life insurance blunders to avoid
• Your life insurer is counting your drinks
• How to assess your life insurance needs
• Your 5-minute guide to life insurance