The Cost of Life Insurance is 50 Percent Less Than You Think, study shows

cost of life insurance

The cost of Life insurance is 50 percent less than you think – a study by nonprofit LIFE Foundation and LIMRA found.

The majority of respondents believed a 20-year level-term life policy for a healthy 30-year old would cost $400 a year.

The actual cost was closer to $150 – $200.

Of course, actual insurance premium rates are dependent on more than just age and general health – your results may vary – but the point is the majority of respondents were not even close in their estimation.

Many would blame the lack of education for this misconception. However, it may simply be a lack of interest – and I’m not talking about what you pay on top of a loan.

Who is more concerned about life insurance? My personal experience says it is the person who has an important life change:

  • Marriage
  • First baby
  • A loved one who passes away

This is where the “interest” comes in to play. Suddenly the concept of having a big chunk of change available for a surviving spouse becomes a priority – and they begin to research things like life insurance.

You are reading a personal finance website so I will assume you have had a life event or that you are here to learn more. Either way – WELCOME! I'm so glad you are educating yourself about the subject!

How to price life insurance

Disclaimer: I am not an insurance agent, nor do I wish to be one. At the time of this writing, I have no affiliation with any insurance companies other than for my own personal uses.

The fastest and easiest way I have found to research insurance prices is to use Zander Insurance’s website.

They do not require you to enter personal information and the results appear as soon as you click “View Quote”.

Here's how:

  • Visit the Zander Insurance website, click on Term Life
  • Fill out your personal information (Date of Birth, Gender, Health Class and Zip Code)
  • Pick the amount of coverage you want
  • Select the term (length of time to be covered)
  • Click “View Quote”

I did this a number of years ago. Because we were on our get-out-of-debt journey, I was very sensitive to the annual cost. Guess what? I thought it would cost about $600 but my 15-year, $500k policy only cost $385 a year.

How much life insurance should I have?

Today I realize we should have gone for a $1,000,000 policy instead of $500k. Sure, it would cost more but when you consider what life insurance does for your family at the worst time of their lives, $600-700 a year is CHEAP.

The great thing about insurance is you can always get more (provided you remain healthy). I visited Zander Insurance in October 2015 to find it would only cost $950 a year to start a new 10-year policy with a $1,000,000 death benefit.

Granted, I am several years older so I expected the quote to be much higher.

Which brings me back to the point of this article: 

cost of life insurance

The average person thinks life insurance costs more than it actually does.

Actually, young adults thought it cost several times more than a term policy actually does.

So ask yourself these 3 questions:

  1. Do you know how much life insurance would cost you?
  2. If you have life insurance, how much are you paying for it?
  3. Is it enough?

Congratulations on being proactive about your finances! Life insurance is an important component in anyone's financial wellness plan and you chose to come here to find out more information.

Tips:

Educate yourself on the difference between Term Life and Whole/Permanent Life Insurance policies.

Talk with your CFP or a financial coach like me to help you find out how much life insurance is appropriate.

Visit ZanderIns.com to run your own quote and come armed with information!


 

Resources:

http://www.limra.com/Posts/PR/News_Releases/Consumers_Overestimate_Cost_of_Life_Insurance_By_Nearly_Three_Times.aspx

https://zanderins.com/term/instantquote.aspx

http://www.stevestewart.me/sos072-the-math-behind-whole-life-and-term-insurance/

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