For Millions without Private Life Insurance, Social Security is the Only Hope

Everybody knows that Social Security helps grandma pay her grocery bill, but many forget that it does much more. Social Security survivors benefits are still the largest and most generous life insurance program in the country--insuring 98% of American children against the loss of a parent [1]. For the family of an average worker who is married with two children, Social Security is the equivalent of a private life insurance policy worth nearly $500,000 [2]. I was reminded of how important Social Security survivors benefits are by a shocking statistic in the news. USA Today reported last Friday that the number of Americans purchasing life insurance has reached its lowest point in 50 years [3].

Here's the relevant quote:

Only 44% of households have an individual life insurance policy, and 30% have no individual or employer-provided life insurance, according to a recent survey by LIMRA, an industry-sponsored group. Some 11 million households with children younger than 18 — viewed as families with the greatest need for coverage — have no life insurance.

Now, not all of the decline can be chalked up to the economic pressure facing American families--but quite a bit of it can:

More than 40% of families said they haven't purchased life insurance because they have other financial priorities.

So economic insecurity is causing people to make choices that would leave them far less secure if a bread-winner were to die.

We see this time, and time again. The private market, especially in the downturn, has become less and less likely to provide Americans with security from life's unforeseen circumstances: unemployment, recession, medical emergencies--and now, even death.

But of all government safety net programs, even Social Security stands in a class of its own. Unemployment insurance, Medicaid, Medicare either have holes in them, or are periodically subject to political attacks that leave them a shadow of their former selves.

Not Social Security. It has always been there, providing families a protective blanket against, among other things, a death in the family. For the families of fallen veterans, Survivors benefits are an especially essential lifeline. The wars in Iraq and Afghanistan have bereft an estimated 4,100 American children [4] of their parents. What is more, the Social Security Administration expedites the processing of survivors and disability claims [5] for the spouses and children of veterans.

Hard times tend to remind us of how vulnerable we really are. The family without private life insurance could very well be yours and mine. At a time when private life insurance is not affordable for millions of Americans, cuts to Social Security of any kind would strike another devastating blow at the security of American families who have already suffered the loss of a loved one. That sometimes gets lost in the debate.

The cutters haven't got to Social Security yet. Here's one more reason why we shouldn't let them.