"The Insurance Barometer Study," and annual research carried out by the Life and Health Insurance Foundation for Education (LIFE) and the Life Insurance and Market Research Association (LIMRA), found that consumers are either confused or inaccurately informed about the actual cost of life insurance, which may be preventing them from getting the coverage they say they need.
According to the new report, many Americans are not financially prepared for their retirement and also do not have life insurance just because they believe that it costs nearly three times more than its actual price. And younger generation overestimates the price almost sevenfold. The study polled more than 2,000 male and female individuals between the ages of 18 and 75 years. Among the respondents were those who solely made decisions for financial matters in the family as well as those who shared making such decisions with their partner.
It was revealed that nearly 30 per cent of all respondents believe that they need more life insurance coverage. This number includes 20 per cent of current policyholders and about half of those who do not own any kind of coverage. However, the perceived high cost of the insurance was deterring 83 per cent of the consumers from buying the needed coverage. Another excuse for not purchasing adequate amounts of life insurance is that people (85 per cent) are more preoccupied with other financial priorities. The study revealed that 31 per cent of all the surveyors are more concerned with paying their mortgage or rent; 26 per cent said that they were more scared of losing money on investments, and 50 per cent of the respondents said that saving for retirement was their number one financial concern.
Surveyors were asked to guess the approximate annual costs of a twenty-year, $250,000 level-term life policy for a healthy 30-year-old person. And while the actual price of annual coverage is $150, the majority of the participants said that their guess would be $400. Younger respondents, who are most likely to qualify for preferred cost, overestimated the actual cost of life insurance by a factor of seven.
Another very interesting finding of the study is that the most underserved markets, in particular women, minorities and younger people, are most concerned of their need for life insurance. For instance, 42 per cent of African Americans and 37 per cent of Hispanic respondents said that they needed more life insurance coverage, when compared to 32 per cent of the total population who said that they did not need any. When compared to 29 per cent of men, about two out of every three women believe that they do not have enough coverage of life insurance. And as to the younger generation, 41 per cent of those aged 25 and less feel that they need more insurance coverage, and 36 per cent of the consumers with the ages between 25 and 44 years (the prime insurance-buying age) do agree with them.
Marvin H. Feldman, CLU, ChFC, RFC, president and chief executive officer of the LIFE Foundation, said in a statement that having life insurance is critical for a financial security of any family, and that our industry must do more in order to provide people with information about the real cost of life insurance coverage.
"The Insurance Barometer Study" is a nationwide annual poll carried out to better understand consumers' attitudes, opinion and behaviors in regards to health and life insurance as well as general financial planning matters. The study also analyzes the public's attitudes towards disability insurance, long-term care insurance, and their buying preferences and feelings about the insurance industry in general.
Tags: Career & Money