Although nearly one-third of consumers believe they need more life insurance, their top reason for not pursuing coverage, according to a report by the nonprofit Life and Health Insurance Foundation for Education and LIMRA, is a misunderstanding of how much it costs.
When asked to estimate the annual cost of a 20-year, $250,000 level-term life policy for a healthy 30-year-old consumer, respondents’ average estimate was $360, compared to the actual cost of around $150.
“If people think that something is too pricey, they often won’t give it a second thought. The fact is, the cost for basic term life insurance has fallen by about 50 percent over the past 10 years and has never been more affordable,” said Marvin H. Feldman, CLU, ChFC, RFC, president and CEO of the LIFE Foundation said in a statement. “Owning life insurance is fundamental to a family’s financial security, and our industry needs to do more to help educate people about the true cost of protecting their loved ones.”
According to the new study, consumers in the most underserved markets are also the most aware of the need for more life insurance. More than one-third of women, compared to 29% of men, believe they do not have enough life insurance coverage.
32 percent of survey respondents aged 25 and younger believe they need more coverage, while 36 percent of consumers aged 25 to 44 — the prime insurance-buying years — believe they need more life insurance. Key minority groups are also more likely to feel under-insured, with 42% of African Americans and 37% of Hispanics indicating a need for more life insurance (compared to 32 percent of the total population).
“Our message to the public is simple: If you’re one of the tens of millions of Americans who lacks adequate life insurance coverage, act now before it’s too late,” added Robert Kerzner, CLU, ChFC, president and CEO of LIMRA, LOMA, and LL Global. “We created the Barometer Study with the LIFE Foundation to provide an annual snapshot of evolving consumer attitudes about a wide range of insurance-related topics, and our hope is that the broader industry will use these insights to help address the crisis of under-insurance this country faces.”
According to this year’s Insurance Barometer Study, while consumers generally agree that life insurance is necessary, it lags behind other financial priorities.
Consumers are more concerned about paying their mortgage or rent (41 percent are extremely or very concerned) or losing money on investments (42% are concerned) than they are about the need for life insurance. Having enough money for a comfortable retirement remains the top financial concern for consumers (67 percent say they are extremely or very concerned).
The Insurance Barometer Study, conducted by LIFE and LIMRA, is an annual survey designed to increase understanding of consumer attitudes and behaviors regarding a variety of insurance and financial planning issues. The research looked at consumers’ attitudes toward life insurance, disability insurance, and long-term care insurance, as well as their purchasing habits and perceptions of the insurance industry. Life insurance may not be as expensive as you believe; speak with a life insurance agent to learn more.