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April 25, 2012updated 13 Apr 2017 8:45am

US life insurers urged to ‘challenge’ pricing misconceptions

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.

By Ronan Mccaughey

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.

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.

Gender 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.”

 

 

 

 

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