What Stop You From Investing In Life

Individual life insurance policy ownership is on the decline. In the 1960s, nearly three in four U.S. households owned an individual policy, according to the Household Trends in Life Insurance report from LIMRA, the life insurance industry’s research arm. In 2010, just 44 percent of households surveyed owned such a policy.

The Great Recession is oft-cited for why many Americans have opted not to buy a policy, or to let an existing policy lapse. But an even bigger trend is the root cause. In 1900, 75 percent of Americans died before the age of 65. Today, 75 percent of Americans live to celebrate their 65th birthday. So the fear of leaving family members destitute in the event of premature death has been replaced by the concern of being a financial burden to family members in old age.

 

Yet we still feel vulnerable. When asked, 58 million U.S. households admitted needing more life insurance. So what’s holding us all back? Here are the five reasons why we don’t have adequate life insurance.

Misperception of cost. Two-thirds of Americans believe life insurance is too expensive. But if you’re healthy and in your 20s or 30s, a policy can cost less than a dollar per day. Pushing 40, now’s a good time for us to revisit our policies. The younger you are, the better your rate.

Inertia. Insurance purchases are prompted by life events. Buying a house. Getting married. Having babies. Day-to-day, our money conversations tend to revolve around household expenses and short-term wants or needs. Dreaming of a winter vacation, and doing some legwork to decide if that dream can come true, is far more pleasant than having a conversation about how much insurance would be needed to replace the income of a spouse who probably won’t die young.

Competing expenses. This is the big one. It can be argued that families with kids at home have the most pressing need for life insurance. But families with kids at home are in a pricey life stage, forever juggling costs of child care, sports and keeping the pantries stocked with the looming twin terrors of college and retirement. So it can be hard to prioritize protection, especially in a slow economy. But insurance is critical because of the economy. It’s more important to maintain insurance when you don’t have additional resources coming in.

Complexity or confusion. How much insurance do I need? And what do all those complex insurance words mean? New research from LIMRA discovered 19 million “stuck” life insurance customers — people who started researching insurance and failed to purchase because they were overwhelmed by too much information or frustrated by opaque technical lingo.

A disconnect. Nearly 4 in 10 respondents in the Barometer study said they don’t trust insurance companies. That’s a lingering issue stemming from the financial crisis. Making policies easy to understand is one step toward rebuilding trust.