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Many consumers think life insurance expenses are higher than reality

Posted On Mon, April 30, 2012

A recent report completed jointly by the LIFE Foundation and LIMRA showed that consumers typically think that life insurance policies cost far more than they typically do.

The 2012 Insurance Barometer Study noted that consumers think that life insurance plans cost, on average, three times as much as they actually are priced. The consensus was that a 20-year, $250,000 life insurance policy for a 30-year-old healthy person would cost $400 a year. In reality, the plan would only cost about $150 per year.

"If someone offered to sell you a gallon of milk for $10.00, you would likely choose to spend your grocery budget on other necessities, knowing that the actual cost is closer to $3.50," said Marvin Feldman, president and CEO of the LIFE Foundation. "If people think that something is too pricey, they often won't give it a second thought."

More than 80 percent of consumers noted they haven't purchased a policy because it is too expensive, the report said. In addition, 85 percent said they have other financial needs to take care of.

"The fact is, the cost for basic term life insurance has fallen by about 50 percent over the past 10 years and has never been more affordable," added Feldman. "Owning life insurance is fundamental to a family's financial security, and our industry needs to do more to help educate people about the true cost of protecting their loved ones."

Those consumers who are concerned about paying too much for life insurance should shop more frugally. One way to do this is to compare life insurance quotes online. This option will help a person find the lowest life insurance rates available.

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