The secret that 80% of life insurance shoppers don’t know


Adam Cecil

Adam Cecil

Former Staff Writer

Adam Cecil is a former staff writer for Policygenius, a digital insurance brokerage trying to make sense of insurance for consumers. He is a podcast producer, writer, and video maker based in Brooklyn, NY.

Published July 28, 2015|2 min read

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Update, June 2020: LIMRA has released their 2020 Insurance Barometer study, so we've updated the numbers in this post accordingly. The crazy part? People are still overestimating the cost of term life insurance. Read on to learn more.How much do you think life insurance costs? If you’re anything like 70% of Americans, you’re probably overestimating.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. The average guess was $500 per year. The average guess for people under the age of 30 was $500 or more per year. More than 25% of those asked thought that it would cost over $1,000 per year.Here’s the secret: the actual price of that policy was $160 per year.

How did those respondents get the price so wrong? Simple: there just isn’t a good way to advertise price information to consumers. Each life insurance policy is priced out individually – it entirely depends on your health, your activities, how much coverage you want, and how long you want that coverage to last.While the policy LIMRA used as an example might have a monthly cost that’s equivalent to a Chipotle burrito, life insurance companies can’t guarantee that price. That’s why most insurance companies end up using vague wording in their advertising, like "affordable life insurance" or "cheap life insurance."This wording hasn’t done anything to get rid of the misconception that life insurance is expensive. "Affordable life insurance," one might ask. "Affordable compared to what?" That’s one reason why over 18 million people who need life insurance are left without coverage.

Here’s another secret: the only way you can ever really tell exactly how much life insurance is going to cost you is if you get a quote. Getting a quote is totally free and can be done by contacting the insurance company directly or by contacting a broker or agent. By working with an independent broker or agent, you can get quotes from a variety of insurance companies. Getting a quote doesn’t obligate you to any company or policy, so feel free to get as many quotes as you want. Every insurance company will look at your profile differently, which can lead to a lot of price variation. Use this to your advantage and price shop for the best policy.

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