Consumers Overestimate the Cost of Life Insurance

Interesting twist on a view point.

Survey respondents were asked to estimate the annual cost of a 20-year, $250,000, level-term life policy for a healthy 30-year old consumer. The actual cost is roughly $150, but Americans estimate the cost at $400. Younger adults, who are most likely to qualify for preferred pricing, overestimate the cost by nearly seven times the actual cost.

2 problems with this:

1. How many agents would pitch just a 20 year term policy? Very few. In other words, this is based on either 'bait and switch' or trying to 'market' the loss leader.

2. How many 30 year olds qualify for preferred rates? For a good portion, the estimated $400 annual costs is probably more accurate than the articles $150 annual rate.

And....

If $400 annual cost is stopping someone from getting the coverage they need, does making it $150 really help? In some cases, yes, the majority, probably not.

The bottom line is that 30 year olds don't see the need just yet, compared to the need for the latest iPhone.

Dan
 
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