Misconceptions over the cost of life insurance
may be preventing many consumers in the US from getting the
coverage they need, according to a new report.
The 2012 Insurance Barometer Study,
conducted by Life and Health Insurance Foundation for Education
(LIFE), and professional development organisation LIMRA, found that
consumers in the US believe life insurance costs nearly three times
the actual price.
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Survey respondents were asked to estimate the
annual cost of a 20-year, $250,000, level-term life policy for a
healthy 30-year old consumer.
The actual cost is approximately $150, but the report said
consumers in the US estimated the cost at $400.
Younger adults, who are most likely to qualify for preferred
pricing, overestimated the cost by nearly seven times the actual
cost.
Marvin H. Feldman, president and CEO of the LIFE Foundation,
said given that the cost basic term life insurance has fallen by
about 50 percent over the past 10 years, the industry needs to do
more to help educate people about the true cost of protecting their
loved ones.
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By GlobalDataGender gap
The survey also found that 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, 41 percent say they
need more coverage. Meanwhile, of consumers aged 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 underinsured,
with 42 percent of African Americans and 37 percent of Hispanics
saying they need more life insurance, compared to 32 percent of
total population, noted the report.
Robert Kerzner, president and CEO of LIMRA, said: “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
underinsurance this country faces.”
