Northwestern Mutual sponsored the “Financial Matters” study to help gauge Americans’ overall financial knowledge and understanding of insurance products. Independent research firm Mathew Greenwald & Associates, Inc. conducted an online survey of 1,664 Americans ages 25 to 65 between June 1 – 9, 2010.
Overall financial literacy scores are just as low as they were in 2006. More than two out of three Americans surveyed received a failing grade on a quiz about financial products, services and concepts. In addition:
- Although overall financial literacy remains low, of those surveyed who received a D or F on the quiz, 88% reported wanting to know about their own personal finances.
- Some basic financial concepts are well understood, including the definitions of diversification (88% answer correctly), asset allocation (79%) and dollar-cost averaging (57%).
- However, Americans fail to understand many key financial concepts. For example, only 35% know that the average rate of inflation is closer to 3% than 6% or 9%.
- Permanent life insurance is among the most misunderstood financial products. Only one in four Americans realize that permanent life insurance can pay dividends (27%) and nearly twice as many (49%) incorrectly believe that term life insurance is more likely to have cash value than permanent life insurance.
To help Americans assess their own level of financial knowledge, Northwestern Mutual has launched the Financial Matters quiz.
For more information about the Financial Matters research: