If you do think life insurance costs too much, you’re not alone. According to a 2012 study conducted by LIFE (The Life and Health Insurance Foundation for Education) and LIMRA (Life Insurance and Market Research Association), consumers are under the impression that life insurance costs three times as much as it actually does.
Survey respondents were asked to estimate the cost of a $250,000 20 year term policy for a healthy 30-year old man. The actual cost is about $150 annually, but the average estimate was about $400. Younger adults overestimate the cost by about seven times.
According to the 2012 Insurance Barometer Study, while nearly a third of the respondents believed they needed more life insurance coverage (including about 50% that had no coverage), one of the reasons most frequently (83%) given for not making the purchase was the fact that it is just too expensive. The number one reason (85%) given for not purchasing it was they had other priorities.
Marvin H. Feldman, CLU, ChFC, RFC, president and CEO of the LIFE Foundation said, “If someone offered to sell you a gallon of milk for $10.00, you would likely choose to spend your grocery budget on other necessities, knowing that the actual cost is closer to $3.50. 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. Owning life insurance is fundamental to a family’s financial security…” He went on to urge the life insurance industry to do more to educate people about the true cost of protecting their loved ones.
Fast Forward to 2013
In this year’s study, a majority of respondents (85%) agree that most people need life insurance and 65% say they personally need it. 33% think they could use more coverage. The study asked the respondents what the likelihood was of them purchasing life insurance in the next year and nearly half (45%) said there was some likelihood of them purchasing a policy within the next year.
“Life insurance has never been as inexpensive or easy to buy – especially with the anticipated growth of online and nontraditional purchasing channels – yet millions of consumers continue to put off the decision.”
If you are one of those considering a purchase of life insurance this year, check out the life insurance rates offered by highly-rated life insurance companies.