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8 things that might surprise you about life insurance

Aug 31, 2019 6 Minute Read

You know the basics about life insurance – it’s there to protect your family, it can provide them with a cash cushion if something happens to you, and, oh yeah, you should probably get it if you haven’t already. But what you don’t know might surprise you.

In honor of Life Insurance Awareness Month, we’ve compiled eight little-known facts that could help you protect your family and save you some money to boot.

Only 4 in 10 Americans have their own life insurance.

More than half of all adults in the U.S. (57%) own some type of life insurance, but that includes people who have coverage through work. If you have group life insurance through your employer, you might think that’s all you need, but it’s a gamble. Most people change jobs periodically throughout their careers; unfortunately, most life insurance policies can’t move with you. If the company owns the policy you’re enrolled in, you’re going to lose it if you leave, no matter how long you’ve been with them.

On top of that, the amount of coverage offered through a group plan is typically smaller than the average individual life insurance policy, according to an industry survey. Having your own individual policy means one less thing to worry about and the peace of mind in knowing you’re always fully covered, even if you change jobs.

Women are less likely to own life insurance than men.

According to the Insurance Information Institute, even though women now make up more than half of the workforce in the U.S., 43% have no life insurance. But what is equally surprising is that most women who are insured have just a quarter of the coverage they need.

The bottom line is that, whether you’re the primary breadwinner, a single parent, a stay-at-home mom, or something in between, life insurance is just as important for women as it is for men. Whatever your career choice or marital status, you want to make sure your loved ones are protected if something happens to you. And if you’re a mom, being covered is especially important.

The most common reason for buying life insurance is funeral costs.

They say you can’t take it with you. That’s probably a good thing, because death is expensive. Funeral costs are typically in the neighborhood of $10,000, including the cost of a funeral director and staff, use of a funeral home, transferring remains, embalming, and burial or cremation.

That’s why a recent LIMRA study revealed an overwhelming 91% of people turn to life insurance as a way to cover final expenses. Many life insurance policies will make a lump sum payment to your beneficiaries when you pass away, providing them with funds to cover funeral costs and general financial needs as well. But looking down the road, many people also see life insurance as a way to leave behind a legacy. A majority of those surveyed (63%) purchased policies as a way to endow a charitable organization when they die or to leave an inheritance for loved ones.

Life insurance is much less expensive than you think.

One of the most common reasons people don’t get life insurance is because they think they can’t afford it (63%). Turns out, most people greatly overestimate the cost. An insurance industry study found that half of consumers think life insurance is nearly three times more expensive than it actually is, and many millennials overestimate the cost by nearly seven times. LIMRA found that four in 10 millennials estimated the cost of a $250,000 term life policy for a healthy 30-year-old at $1,000 a year or more. The actual annual cost is around $160, making the $13 monthly premium about the same as a Netflix subscription. Of course, the younger you are when you get life insurance, the less expensive it is. That’s because the cost for life insurance coverage can increase by up to 10% every year as you age. By getting covered now, you can lock in lower rates and avoid the price hikes later on.

You may not be as protected as you think with your current policy.

One of the most common reasons people don’t buy life insurance is because they already have coverage. What they don’t realize is that, more often than not, they don’t have enough. According to LIMRA, nearly half of those with insurance are underinsured. This is partly because 9 million households only have group life insurance, and that’s rarely enough. LIMRA estimates that having only group life insurance creates an average $225,000 gap in needed coverage, yet only four in 10 people have an individual policy.

So how can you make sure you have enough life insurance? Start by figuring out the amount of money your family would need to meet expenses if they could no longer rely on your salary. Be sure to include things like a mortgage payment, college tuition, utilities, food, clothing and any loan payments. Once you figure out how much money your loved ones would need if you died, then you can compare policies from different life insurance companies.

Getting approved doesn’t have to be a painful process.

One thing that’s NOT a surprise is that most consumers want a simpler way to get life insurance coverage – 47% prefer simplified underwriting to traditional underwriting. The reason is, well… simple. Simplified underwriting allows you to skip a lot of the traditional red tape, including meeting with an agent, filling out paperwork, and taking a medical exam. In fact, more and more insurers are offering these options to cater to time-strapped busy consumers. But even if you go the traditional route, getting insured doesn’t need to be a long, drawn-out process. Many insurance companies are increasingly providing online access to FAQs and competitive quotes. As for the medical exam, it may be easier than you think and worth the extra time and effort. More on that below.

Taking a medical exam can help you save money.

If you’ve been dreading your medical exam, don’t sweat it. It’s really nothing to worry about and, with a little preparation ahead of time, you can help ensure the best possible results and a favorable rate. For practical pointers, check out our tip sheet, “Acing your life insurance medical exam.”

$1.5 billion in life insurance and related products is paid to consumers every day.

If you dutifully send in your premium payments month after month, year after year, you may, on occasion, wonder if you’ll ever see anything in return. The fact is, the life insurance industry pays beneficiaries almost $1.5 billion in life insurance, annuity, long-term care, and disability payments every single day. So rest easy, and know that the money will be there when you need it, providing financial security for family and loved ones.

Know what else might surprise you?

You can get a competitive life insurance quote in just 60 seconds! Our goal is to make it simple to find the right policy. So reach out, get your questions answered, and feel more confident about protecting your family and their future.


At eFinancial, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed and updated regularly to ensure the information is as relevant as possible.