Top 5 (not so) Great Reasons For Not Getting Life Insurance

People have lots of (not so) great reasons for not buying life insurance.

LIMRA, the Life Insurance trade group does an annual survey to find out peoples thoughts about life insurance. One of the things they ask people is why they don’t buy life insurance.

Here are the top five (not so) great reasons for not getting life insurance.

1) It is too expensive

That sounds like a good reason, except that life insurance is not as expensive as most people think it is. The study found that three quarters of people feel they have a good understanding of life insurance. But when asked to estimate the cost of a $250,000 term policy for a healthy 30 year old, 80% of them overestimated the cost. Those surveyed under the age of 25 estimated on average that the annual premium would be over $1,000.

What is the actual cost for a $250,000 policy? About $150.

2) I have other financial priorities right now

That sounds reasonable too. But the same people ranked “burdening dependents if I die prematurely” as their seventh highest financial concern. Interestingly all of the top 7 financial concerns could be addressed through good insurance planning.

If your concern about long term disability is taking a priority over death, that’s reasonable. But it seems like many people are prioritizing that new SUV over insuring that the family will be able to keep the house if they die of a heart attack. That just doesn’t make sense.

3) I have as much as I need / I don’t feel I need any

Many people underestimate the amount of life insurance they need and overestimate the amount they currently have. If it’s been over three years since you’ve reviewed your life insurance policies you’re overdue. Verify how much coverage you have including what you have through work. When they look into it, most people find they don’t have as much life insurance as they thought they did.

In order to properly calculate how much life insurance you need you should do a comprehensive financial needs analysis. If you want a rule of thumb, we recommend that you carry a minimum of ten times your annual income in life insurance. Read more about Why We Recommend Life Insurance Of 10 Times Annual Income.

4) I do not trust insurance companies

Many people lump together all of their bad experiences with insurance in one pile and say that they don’t trust insurance companies. They may avoid buying life insurance because of the time their roof leaked and the insurance company told them it wasn’t covered under their homeowners policy. That’s not much of a reason to leave your family in financial jeopardy if you die.

If you buy your life insurance policy from a highly rated life insurance company you can trust that they will pay your beneficiaries the full amount of your life insurance when you die.

5) I do not trust insurance agents

Unfortunately insurance agents have a bad reputation, and in some cases it is well deserved. However, most insurance agents are honest, decent trustworthy people. In fact, there are plenty of really great insurance agents. The key is finding an agent that you are comfortable with. A good place to start is by asking your friends, family and coworkers about their life insurance agent. If after talking to any agent you have a bad gut feeling, find another agent for a second opinion.

Please don’t use any of these 5 (not so) great reasons for not buying life insurance. If you found this information helpful, please share it with your friends and family.

Marcy Tooker

The Tooker Agency

Riverhead NY

631-502-0000

marcy@thetookeragency.com