Consumers are confused about the cost of life insurance, overestimating its cost by nearly three times, a report from LIMRA and the LIFE Foundation found.
The 2012 Insurance Barometer Study, released Wednesday, asked respondents to estimate the annual cost of a 20-year, $250,000 level-term life policy for a healthy 30-year-old consumer. Respondents estimated such a policy would run them about $400 per year, but the report put the cost at around $150.
“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,” Marvin Feldman, president and CEO of the LIFE Foundation, said in a statement. “If people think that something is too pricey, they often won’t give it a second thought.”
The truth is, Feldman continued, life insurance is cheaper than ever before, and costs have fallen by about 50% over the past 10 years.
Almost one-third of respondents said they needed more life insurance, but 83% said they hadn’t purchased or increased their coverage because it was too expensive.