Once a year, LifeHappens.org and LIMRA conduct a study of the state of the insurance industry and publish their findings. These are some of the key findings of this year’s study, pertaining to life insurance:
- One in four Americans say they need more life insurance, but only 10 percent are very likely to purchase a policy within the next year. Most note that it’s too expensive; however, they often overestimate the cost, typically younger consumers who typically pay less.
- While 80 percent of adults believe that most people need life insurance, only 1 in 5 people are very likely to recommend it. This is unfortunate, as half of Americans believe they would feel the impact from the loss of the primary wage earner within six months.
- Over a third of Americans are concerned with leaving dependents in a difficult financial situation should they pass away prematurely, and over a third are concerned with leaving others to pay for their funeral expenses.
- Three quarters of the survey respondents feel they have a good understanding of life insurance, however;
- While 2 of 3 consumers say life insurance is too expensive to purchase, people tend to overestimate the cost. In fact, a quarter of the respondents thought the price for a $250,000 term policy (that would cost $15o per year) would cost at least $1,000 annually.
- Twenty percent with coverage don’t know if they have a permanent or term policy, so they may not know that they have something that builds cash value or that their coverage could come to an end.
- About half of consumers aren’t aware that permanent life insurance can accumulate cash value that can be borrowed or that term is appropriate for temporary coverage.
The study is fairly comprehensive, so I will have to cover additional highlights in later posts.
LIMRA employed an online panel to survey consumers on insurance and financial topics in January, 2014. Responses were received from 2,047 individuals. The data were weighted by age, gender, education, race, religion and income to be representative of the general population. A propensity score adjustment was added to correct for biases inherent in Internet panels. The margin of error is +/- 3 percentage points.
Life Happens is a nonprofit organization dedicated to helping Americans take personal financial responsibility through the ownership of life insurance and related products, including disability and long-term care insurance.
LIMRA is a worldwide research, consulting, and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness.