Although nearly one-third of consumers believe they need more life insurance, but according to a report by the nonprofit Life and Health Insurance Foundation for Education and LIMRA, their top reason for not pursuing coverage is a misconception of how much it costs.
Asked to estimate the annual cost of a 20-year, $250,000, level-term life policy for a healthy 30-year old consumer, the average estimate from respondents was $360, compared to the actual cost of about $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.”
The new study found that consumers within the most under-served markets are also the most aware of their need for more life insurance. More than one in three women believe they do not have enough life insurance coverage, compared to 29 percent of men.
Among survey respondents 25 and younger, 32 percent say they need more coverage, and of consumers 25 to 44 — the prime insurance-buying years — 36 percent believe they need more life insurance. Key minority groups are also more likely to feel under-insured, with 42 percent of African Americans and 37 percent of Hispanics saying they need 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.”
This year’s Insurance Barometer Study also found that while consumers generally agree that life insurance is a necessity, it falls behind other financial priorities.
Consumers are more concerned with paying their mortgage or rent (41 percent say they are extremely or very concerned) or losing money on investments (42 percent) than they are with issues that speak to the need for life insurance. Having enough money for a comfortable retirement continues to be consumers’ top financial concern (67 percent say they are extremely or very concerned).
Conducted by LIFE and LIMRA, the Insurance Barometer Study is an annual survey designed to increase understanding about consumer attitudes and behaviors regarding a host of insurance and financial planning matters. The study examined consumers’ attitudes about life insurance, disability insurance and long-term care insurance, as well as their buying preferences and perceptions about the insurance industry. Life insurance won’t necessarily cost as much as you believe it will; it’s worth talking to a life insurance agent to find out.