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Why are so many people declining life insurance?

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Life insurance is an invaluable investment for people from all walks of life. The benefit is helpful regardless of whether you're talking about term-life or whole-life policies.

The former allows policyholders to financially protect loved ones in the event of their passing while the latter, provides this same death benefit plus an added retirement planning component.

One would assume the purchase rates for life insurance would be high given the tremendous benefits. However, a recent survey by a popular insurance site found a low number of individuals who have purchased coverage.

What did the study find?

The survey of 1,001 U.S. adults found that 37 percent didn't have life insurance.

Breaking the numbers down by generation revealed:

  • 26 percent of baby boomers did not have policies
  • 29 percent of gen-xers did not have policies
  • 65 percent of millennials did not have policies

Why are so many people deciding against purchasing life insurance?

The primary reason cited by survey participants for declining life insurance was cost (59 percent). The second p reason was participants felt healthy and thereforeviewed the benefit as unnecessary (51 percent).

33 percent cited difficult and confusing purchasing process as a reason for declining life insurance.

Were things like marital status, income or education found to have played a role?

Researchers discovered the following concerning these factors:

  • 75 percent of people with life insurance were married while only 23 percent of single people had life insurance
  • 74 percent of households with an annual income between $50,000-$75,000 had life insurance; 78 percent of households with an annual income of $75,000-plus had life insurance
  • 72 percent of people with a college degree - and 65 percent with some college credits - had life insurance

The figures are noteworthy and it will be interesting to see how the insurance industry responds.

What are your thoughts? Have you purchased life insurance? If so - or if not - what's your background and what were your reasons?

Source: Benefits Pro, "Americans aren't buying life insurance, but why?" Katie Kuehner-Herbert, June 26, 2017

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