The study, the 2012 Insurance Barometer Study, sheds light on one what could be one of the main factors contributing to the endemic coverage cap in the country. The survey, which asked 2,011 respondents between 18 and 75 to estimate the average annual cost for a 20-year, $250,000 term life policy for a healthy 30-year old consumer, found that respondents came up with $400. The actual cost is $150.
“If someone offered to sell you a gallon of milk for $10.00 you would likely choose to spend your grocery money on other necessities, knowing the actual cost is closer to $3.50,” says Marvin Feldman, president and CEO of the LIFE foundation. “If people think something is too pricey, they often won’t give it a second thought.
“The fact is, the cost for basic term life has fallen by about 50 % over the past ten years and it has never been more affordable,” he adds.
Although the survey found no one cause for the rampant misconception, it does offer a logical explanation as to why the coverage gap is as gaping as it is. The finding also offers the industry a focused strategy to implement to close that gap; a vibrant and bombastic public relations campaign that relays the truth about life insurance costs.
Another finding in the survey that offers the industry a silver lining is that consumers in the most underinsured market (women, young adults and minorities) are aware that they need more life insurance. The industry’s clientele are aware that they need the product that the industry sells, which in many other sectors of the economy is half the battle.
A sign of the hard economic times, and something that is completely out of the industry’s realm of control is that life insurance is being surpassed by more pressing financial priorities. We are living in an age where people are missing car and mortgage payments due to the strangling recession. And not surprisingly life insurance is not on top of their financial “to do” list.