Millions of Americans are still without life insurance despite their affordability and availability. Here’s the flawed logic in that risky decision

Ask any American if they like the idea of their funeral being a messy financial affair and we bet very few of them would. Ask if they’re troubled by the idea of family or loved ones struggling to cover post-death expenses and the common answer will be “Yes.”

Now, ask them why they don’t have life insurance in place. You’ll get several different replies, few of which are really a good reason.

The Life Insurance and Market Research Association in conjunction with Life Happens revealed some interesting numbers:

  • 90 percent of people think a family’s primary wage earner should have life insurance
  • 61 percent don’t buy life insurance because they have “other financial priorities”
  • 44 percent of Millennials overestimate the cost of life insurance by 5 times the reality
  • 35 percent of households would feel the financial strain within a month of a primary wage earner passing away

Even though 90 percent think primary wage earners should insure their lives, today, 40 percent of Americans don’t have (or don’t even know if they have) life insurance. Here are their primary reasons.

Number 1 — “It’s too expensive”

Nobody will argue that extra expenses can be an annoyance. Having to pay for life insurance is a leading reason why so many of us don’t have it. However, there seems to be no problem spending in other areas that may offer pleasant distractions, but which don’t provide any long-term benefit to our lives.

Spending figures and categories revealed through retirement research by GoBankingRates reveal expenses that could easily cover life insurance. The average American is spending $5,339 annually on things like eating out, coffee, alcohol, and leisure events. Meanwhile, they’re passing on life insurance that has (for an exemplar group of healthy 35-year old males) an average monthly cost of under $100 for $2 million of coverage.

Premiums differ, of course, based on factors like age, gender, and health condition. But the general contrast of $1,200 a year for millions in life insurance against more than $5,000 in leisure expenses should make even the most cost-wary customer think twice.

Number 2 — “I’m currently healthy”

The fact that a person is in good health today has nothing to do with the concept of life insurance, and yet it’s another prime reason why coverage is ignored. Statistics by age demographics show that such reasoning does decrease with age: almost 66 percent aged 18 to 29 don’t have life insurance, dropping to 29 percent aged 30 to 49 and 26 percent aged 50 to 64.

A further 47 percent don’t want to deal with the medical exam that can be required by some life insurance providers. Accepting our mortality is the first step in getting life insurance, so it makes sense that the younger a person is, the further away the reality seems.

Another reality is that young people are in the best position of all age demographics to get a good deal on life coverage. Read our previous blog on making an early start with life insurance for a more in-depth analysis.

Number 3 — “I have a pre-existing condition”

A pre-existing health condition such as high blood pressure, heart issues, or diabetes will place an individual in the “high risk” category. While this will make life insurance more expensive and a little harder to find, the coverage is still out there and you don’t need to be alone in finding it.

A dedicated insurance agent will discuss your condition with you to find you the best carrier for your needs. It’s best to partner with such an agent due to the paperwork that is typically involved with getting the best quotes for a pre-existing condition, such as writing cover letters and liaising with caregivers to get all pertinent medical information.

An insurance agent will also help you compare quotes from different providers; a vital piece of assistance when it comes to saving every penny you can. Some policies, such as a graded benefit life policy, don’t require an exam and typically ask only a few health-related questions.

Other coverage types may require a full medical exam. While this may be uncomfortable, it gives an insurance provider more concrete information and the ability to more accurately (and possibly more cheaply) assemble a coverage plan. The comfort level of the individual may ultimately decide the coverage they settle on.

Number 4 — “It’s too late to get coverage”

There’s a common misconception that the life coverage window closes somewhere between the ages of 60 to 65. The truth is that there are companies who specialize in insuring seniors. Term life insurance exists at these ages and beyond, allowing the policy holder to put coverage in place for as little as a year (called an annual renewable term) or up to 5 years, 10 years, or longer.

Burial insurance is another option which will cover the costs of burial but will go no further than that. This means that any outstanding debts will still be the responsibility of any surviving next of kin. If you’re 70 years old or over, then Guaranteed Universal Life Insurance may be right for you. This coverage can provide for seniors up to the ripe old age of 121.

Again, current health condition and lifestyle play a part in getting life insurance at any age. Remember these factors when comparing premiums from possible providers, and don’t presume it’s ever too late to get some insurance protection in place.

NICRIS Insurance focuses on providing clients with the appropriate suite of products to protect them, their interests, and their loved ones. If you need some insurance advice or would like a free, personalized insurance review just drop us a line!