Rep. Schweikert Wishes NAIFA a Happy 125th!June 18th, 2015, Comments Off on Rep. Schweikert Wishes NAIFA a Happy 125th!.
Americans Continue to Overestimate Cost of Life InsuranceJune 9th, 2015, Comments Off on Americans Continue to Overestimate Cost of Life Insurance.
Cost is the reason most Americans give for not owning life insurance, according to the 2015 Insurance Barometer Study, released recently by Life Happens and LIMRA. Yet, 80 percent of consumers misjudge the price for term life insurance, with Millennials overestimating the cost by 213 percent, and Gen Xers overestimating the cost by 119 percent.
Nearly one third (30 percent) of Americans believe they need more life insurance and more than 2 in 5 (43 percent) say they would feel a financial impact within 6 months if the primary wage-earner were to die. However, the majority of Americans (54 percent) say it is unlikely they will purchase life insurance within the next 12 months.
“We’ve consistently seen over the last five years that consumers think life insurance is more expensive than it really is, and now we’re seeing many are also confused as to what factors determine the cost for life insurance,” said Marvin Feldman, CLU, ChFC, RFC, President and CEO of Life Happens. “We need to help educate the public about how affordable life insurance can be and the factors they can control to ensure they get the best and most comprehensive protection possible.”
Understanding cost factors
While most consumers have a moderate understanding on how age and health factors can affect the cost of life insurance, many are unaware of other factors that can impact how much they pay for life insurance.
“Only about a third of consumers knew that their credit histories and driving records could affect how much they pay for life insurance, and less than half realized their hobbies and lifestyle could impact the cost of their life insurance policy,” said Todd A. Silverhart, corporate vice president and director, LIMRA Insurance Research.
“In addition to believing life insurance is too expensive, our research has shown that consumers are intimidated by the process of buying life insurance — 4 in 10 don’t know how much they need or what to buy. Having a better understanding about the factors that influence pricing might help consumers feel more confident and encourage them to pursue getting coverage they believe they need,” Silverhart added.
Information about those cost factors may not be reaching potential customers as effectively as previously believed, the study notes. Younger Americans are more likely to use the Internet to shop for insurance, while older Americans are more likely to purchase offline.
What is clear is that while Americans understand the importance of life insurance, they continue to prioritize other short-term expenditures, often failing to understand how affordable life insurance can be.
Lowering the cost of insurance
Despite the misconceptions around the overall cost and what factors go into the pricing of a life insurance policy, there are a few easy ways all Americans can use to lower the cost of their policies:
By LIMRA and Life Happens