70 Percent of Americans Have Low Life Insurance IQ
Life insuranceÂ is a critical financial asset to the majority of American households. Only a small percentage of families can afford to pay costs associated with a loved one’s death, including funeral and household expenses, without additional financial assistance.
Despite this fact, the number of individuals and families thatÂ buyÂ life insurance policiesÂ continues to decrease. According to a new survey conducted by LIMRA, the reason could be that a large percentage of Americans lack the adequate knowledge to make informed decisions about life insurance coverage.
What Do You Know About Life Insurance?
Worldwide research and consulting company LIMRA released the results of a survey it conducted recently, which revealed that Americans suffer from a low life insurance IQ. In other words, Americans lack education pertaining to why life insurance protection is needed and how the products work.
LIMRA issued the IQ test to 4,000 Americans to gauge their knowledge and comprehension of life insurance. Less than one-third of those who took the 10-question exam passed, while a whopping 55 percent got fewer than five questions correct. Astoundingly, less than one percent surveyed answered all 10 questions regarding life insurance policies correctly.
LIMRA found a correlation between life insurance education and the number of people who actually carried life insurance. The respondents with high life insurance IQs cited multiple sources of information attributing to their understanding of life insurance, including having access to a seminar or financial planner, or receiving information through their occupation.
Benefits of Life Insurance Policies
There’s no doubt that people are more likely to buy life insurance policies if they understand its benefits. Jennifer Douglas, LIMRA associate research director for strategic development and research, shared “One of the top reasons consumers give about why they don’t buy life insurance is because it is ‘too confusing.'”
If you have been thinking about buying life insurance but have been reluctant to do so, here are some reasons to strongly consider making the purchase:
- It is a major financial asset:Â Life insurance coverage not only helps pay for final expenses, including funeral costs, but also pays debts left behind, including medical expenses, housing costs, educational expenses and so much more.
- There are different types to choose from:Â Individuals can purchase both permanent (whole, variable, universal) orÂ term life insuranceÂ coverage. Permanent life insurance offers coverage over the course of a lifetime and offers investment options, while term coverage simply offers protection over a period of time (typically 10 – 30 years).
- Life insurance is affordable:Â Many people assume that life insurance is too expensive to purchase, but according to the LIFE Foundation and LIMRA, coverage can cost as little as $12.50 per month for a $250,000 term policy.
There’s nothing more devastating than suffering both the emotional strain of losing a loved oneÂ andÂ the financial strain of paying for their final costs after death. If you have yet to buy life insurance, now is the time to finally take this important step.