Insurance and Wealth Building among Lower-income Households
Hundreds of organizations in the U.S.
offer programs to help low- and moderate-income
clients save money, build assets
and increase their wealth. These programs
include homeownership counseling,
earned income tax credit (EITC)
filing services and individual development
accounts, among others. Several
studies document the ways in which these
programs have helped thousands of clients
to save and purchase assets, but little has
been written about how insurance (e.g.,
home, life or health insurance) has
helped them acquire and protect their
assets. In 2007, the Chicago Fed’s
Consumer and Community Affairs unit
organized four focus groups to explore
the role of insurance in helping lower-income
households avoid or manage financial crises. These groups also helped
us examine the reasons why people have
(or do not have) insurance, as well as the
distribution channels that people use to
obtain insurance and their familiarity
with insurance concepts.