As someone who has been in the industry for over 15 years, I still find it frustrating and worrisome to learn that most people do not understand life insurance enough – to help them make better decisions about their life protection needs.
For one thing, life insurance companies have been pouring their marketing budget into both online and offline channels. But the facts and stats have reflected that consumers’ knowledge and attitude toward life insurance may eventually leave their families in struggle if they die.
Sad may it seems, but research has found that negative emotions are more powerful and compelling in a marketing sense. With these 20 facts and stats, I hope to inspire insurance marketers to put more love and care to craft out messages that can truly resonate with their customers.
Here are 20 sad facts and stats about life insurance:
About Life Insurance Coverage In General
50 Million American Households Know It’s Not Enough
Unfortunately, 50 million American households acknowledge that their insurance isn’t enough to pay off as much debt as possible when you’re gone.
The sad thing is that, despite acknowledging the unfilled protection gap, a lot of people still think insurance is very complicated and refrain from talking to an insurance agent for fear that they will be sold to.
(Source: LIMRA)
Only 59% of Americans Have Life Insurance
Common misconceptions about the cost of life insurance and a lack of understanding of their policies have led to many Americans indifferent about getting professional advice.
As of 2020, only 59% of Americans have life insurance. Sadly, this means nearly half the nation leaves their debt and expenses to their loved ones when they pass.
(Source: insure.com)
The Average American has About $168,000 in Coverage
Consider the fact that as much as 70% of all Americans are underinsured. And if all Americans were properly insured, it would undoubtedly shoot this number a few times higher!
So you shouldn’t necessarily use it as a guide for your own coverage.
(Source: Business Insider)
Suicide is Not Covered Within the First Two Years of a Policy
Life insurance does not provide benefits in the event of an insured committing suicide within the two-year discovery period.
However, benefits are typically paid in the event of a suicide taking place after the discovery period.
(Source: Investopedia)
Life Insurance Does Not Cover Risky Activities
Risky activities that will increase the potential for injury or death, are usually not covered by life insurance. Depending on your policy, these activities may include:
- Motorcycling
- Scuba diving
- BASE jumping
- Hang gliding
- Auto racing
- Aviation
- Rock climbing
- Mountain climbing
(Source: Investopedia)
About Customer’s Insurance Knowledge
60% of Millennials Don’t Know Which Life Insurance to Buy
Sixty percent of Millennials don’t know what kind of life insurance to buy and how much coverage they should get.
As we know there are far too many life insurance companies to choose from, and each has its own specific policies and rules. This information and lack of understanding leave many unsure of what they really need.
Most Shoppers Think Life Insurance Is 3xs The Actual Cost
Life insurance shoppers estimated the cost of coverage to be over 3 times the actual price! According to the 2020 Insurance Barometer Study by LIMRA, about 70% of people overestimated the cost of a 20-year $250,000 life insurance policy for a healthy 30-year-old.
If they had learned that life insurance is not as expensive as they had thought, people would have brought it earlier. And insurance companies can surely do more to increase the transparency of the price.
25% Have Never Received Advice from an Insurance Professional
It’s a fact the life insurance, among other insurance, is not easy to understand for most people. Surprisingly, 1/4 of Americans said that they have never talked to life insurance agents or financial professionals about their coverage needs. This percentage goes even higher to 43% with Millennials.
About the Insurance Application Process
Four Out of Ten Americans Don’t Qualify for Life Insurance
That’s a frustrating number! Sometimes, not having life insurance actually comes down to the fact that some people aren’t good enough candidates. Companies deny most Americans due to severe health issues or failing the required health exam.
(Source: Venture Beat)
19 Million Americans Don’t Make It Through the Application Process
Getting life insurance can be a daunting and lengthy process that, in the end, many Americans don’t even understand as they’re going through it. As a result, 19 million of Americans don’t even finish the process after they’ve started.
(Source: LIMRA)
Half of American Wants to Skip the Life Insurance Medical Exams
Since a person’s health can be a huge indicator of their lifeline, many life insurance companies will require their potential policyholders to get a physical exam so they can provide them with the most appropriate rate.
However, half of the life insurance consumers have stated that they’re most likely to purchase policies that are priced without a physical examination.
(Source: iii.org)
Smokers Pay 2-3 Times More Premiums
About 14% of Americans are smokers, and many of them avoid life insurance due to its cost. It’s true that most policy rates are two to three times for smokers because of their health risks.
It might sound sad for smokers. Fortunately, if you’re quitting or recently quit smoking, most companies will offer you a new rate after one smoke-free year.
(Source: Policygenius)
The Major Life Insurance Motivators are Burials/Final Expenses and Wealth Transfer
It probably doesn’t come as a surprise that when the topic of life insurance arises, the primary motivator is preparing for death. Therefore, a 2020 report stated that 84% of Americans indicated that burial/final expenses were a reason they acquired life insurance, and 66% stated wealth transfer as another reason.
(Source: LIMRA)
It Can Take Up to Two Months to Get Life Insurance
Although some companies are really striving to make the life insurance process as quick and care-free as possible, on average, it still takes about 3-8 weeks. In a fast-paced world filled with instant gratification, this is often far too long for the average American.
(Source: True Blue Life Insurance)
About What a Life Policy Brings Before and After Death
16% of Americans Don’t Know Their Spouses’ Policy
Your spouse is your partner in every way that counts. When you’ve chosen to share your life with someone, you should know what will happen when “death do us part” comes around. Sadly, 16% of Americans don’t know if their spouse even has life insurance, much less what it might entail if they do.
(Source: lifeinsuranceblog.net)
Tombstones Are Not Covered by Life Insurance
One of the purposes of life insurance is to cover the cost for final arrangements – which may include the cost of tombstones, among other funeral expenses.
What if a tombstone was damaged? (e.g. By lawnmowers, falling trees or anything you may or may not have thought of…) Sadly enough, it is not covered by “life” insurance.
But since it is considered your property, it is covered under your homeowner insurance – if they are still in force by that time.
(Source: Coverhound.com)
The Average American Has $62,000 of Debt When They Die
Debt is often a dark looming presence that follows most individuals throughout their life. Whether this comes from a college loan, a mortgage, or a credit card, it is easy for debts to stack-up to the extent you can’t pay them all before death.
Getting life insurance will ensure all of this debt doesn’t fall on loved ones in addition to the grief of your passing.
(Source: CBS News)
70% of Americans Will Struggle Financially After Their Loved Ones Passed Away
Many Americans suspect they don’t have a sufficient amount of life insurance. And even for those who have some life insurance in place for their loved ones, only 30% of the coverage is sufficient.
That means that 7 out of 10 American families will struggle after the death of the insured. They may end up in a sort of money to settle all debts, funeral costs, and so on.
(Source: Business Insider)
About Death Benefits
You Can’t Name Your Snake As the Beneficiary
And no pet owners want to leave their pet unattended if they die. However, you literally can’t name your pet as a life insurance beneficiary.
But instead of leaving it blank, it’s essential to designate primary and contingent beneficiaries to receive the insurance death benefit in the event of your untimely death.
Otherwise, the benefits are subject to probate, and they ultimately end up in the pockets of your insurance company.
(Source: Policygenius)
No Death Benefits Will Be Paid to a Beneficiary if He/she Murder the Insured
That makes sense right? No one should be rewarded by killing someone.
If your beneficiary murders you—or is somehow tied to your murder—they should not and will not receive the death benefit. Instead, your insurer will pay out the death benefit to your contingent beneficiaries or to your estate.
(Source: Investopedia)
Water photo created by wayhomestudio – www.freepik.com
Final Thoughts
Sad but true, life insurance might not be the most cheerful topic to come across in any conversation. But the worse idea is to leave our loved ones behind with financial struggles on top of the grief they will have to go through. These facts and stats can literally be turned into marketing opportunities with revealing, helpful and educational content. And this is the first step to get your customers care more about life insurance.
