Where The Affordable Care Act Falls Short

While the Affordable Care Act ("Obamacare") has created strong incentives for all Americans to become insured through health insurance, it cannot compete with the real-life financial struggles so many Americans face. Nor can it begin to cover all of the insurance needs the average citizen faces.

Logically, health insurance is the natural starting point to protecting American children's future, but it is not the only form of insurance that needs to be universally accessible.

According to a recent survey conducted by Princeton Survey Research Associates International (PSRAI) and published through Bankrate.com RATE, 20 million American households with dependent children are underinsured or uninsured entirely. The study also found that 37 percent of parents with young children have no life insurance, and of those that do carry life insurance, about 33 percent are insured for $100,000 or less.

Why Is This Startling?

For one, the trend does not appear to be strictly correlated to income. The study found that 25 percent of Americans who have an annual household income of or greater than $75,000 are still underinsured (defined as less than $100,000 of coverage for a household).

Related Link: Deutsche Bank Names Top Life Insurance Buyout Target

Additionally, the reality exposed by the research is that almost half of American households (42 percent) are uninsured, carrying no life insurance at all. And, 50 percent of those who do have some form of life insurance (approximately 29 percent of American households) are underinsured.

One final result from the survey that may cause pause is that 11 percent of women and 5 percent of men who indicated that they do carry life insurance, they did not know how much coverage their family has.

Is ‘Underinsured' Truly A Problem?

Bankrate's insurance analyst, Doug Whiteman, commented on the definition of "underinsured," reminding that "there are many rules of thumb regarding how much life insurance is enough."

He continued, "Ultimately, it's a personal decision that's based on a range of factors including your debts, mortgage, potential college costs for your children (that's if you have any), and likely burial expenses."

Larry Light, Forbes contributor, and Neal Frank, founder of Wealth Resources Group, remarked, "You can't protect your family if you don't know how much you need every month. Don't just guess. You might think that $500,000 in terms of coverage is sufficient. After all, it's a lot of money.

"But give it careful thought. You may find that this is not enough."

Determining Your Need

While there are plenty of life insurance resources available for free throughout the web, Bankrate's calculator is top-notch, as is the informational guide found through Investopedia.

Remember: financial ignorance is no solution. Take time to discover and come to terms with your own financial health and the financial future of you family. Invest in yourself and take control of your own personal finance.

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