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.