Despite consumers’ broad consensus that having life insurance coverage is important, ownership has been declining over the past decade. Today, just over half of U.S. adults (52%) report having life insurance, down from 63% in 2011.
According to the 2023 Insurance Barometer Study, conducted jointly by LIMRA and Life Happens, more than 100 million Americans believe they don’t have enough coverage. The good news is a record-high proportion of Americans (39%) said they intend to purchase life insurance this year. In addition, while traditionally underserved markets — young people, Black and Hispanic Americans, and women — all report higher coverage gap rates, these groups were more likely than the general population to say they planned to obtain coverage this year.
Unfortunately, LIMRA sales data suggests many of these people have yet to follow-through and buy coverage. In the first half of 2023, the number of policies sold increased 4%, compared with the prior year. While this is solid growth for the industry, it wouldn’t reflect the millions of people who said they intended to buy life insurance this year.
What keeps people from buying the coverage they know they need and how do we convert intention into action? As an industry, we’ll need to debunk some common misconceptions people have.
Misconception One: It’s too expensive.
The top reason people give for not buying coverage is perceived cost — they believe life insurance is too expensive. Nearly half of people (46%) who believe they need life insurance say they haven’t purchased it because they think it is too expensive. Yet, our research shows more than half of consumers (55%) overestimate the cost of life insurance by three times the actual cost. The reality is life insurance has never been more accessible or affordable. A healthy 40-year-old man will pay, on average, less than $30 per month, or less than a $1 a day for a $500,000 20-year term policy.*
Misconception Two: It can wait.
Many people — particularly younger adults — believe they don’t need life insurance right away. One in five uninsured and underinsured consumers say they haven’t purchased coverage because they ‘haven’t gotten around to it. ’ For younger people who may not have a spouse/partner and or children, there is a sense they don’t need life insurance yet. The fact is waiting to buy life insurance can be an expensive proposition. Younger and healthier applicants are more likely to get better rates. Buying a policy can protect their financial future and the financial security of their loved ones.
Misconception Three: Life insurance is only for final expenses.
LIMRA research shows a quarter of Americans view life insurance as only for burial and final expenses. This perception is higher among Black Americans, where nearly 3 in 10 say they believe life insurance is only for final expenses.
Life insurance can support a family’s future financial security beyond paying final expenses. Life insurance can offer income replacement protection or enable wealth transfer — two critical ways life insurance can benefit loved ones after a wage earner dies.
Celebrating the 20th Anniversary of Life Insurance Awareness Month
As we mark the 20th anniversary of Life Insurance Awareness Month, LIMRA has launched its 2023 LIAM page. In it, you will find fact sheets, infographics, interactive pages, and social media posts that highlight our research about the perceptions and misconceptions consumers hold about life insurance.
We hope these resources help our members and the broader industry engage and educate consumers about the important role life insurance plays in financial security and protecting the ones they love.