Ahead of Life Insurance Awareness Month, New
Corebridge Financial Research Reveals How Misunderstandings Around
Cost Contribute to Life Insurance Coverage Gap
According to new research from Corebridge Financial, many
Americans have a good understanding of key life insurance
principles, yet nearly 6 in 10 either do not have coverage (50%) or
do not know if they do (9%).
Misunderstandings around cost could help explain this life
insurance coverage gap. While 8 in 10 (80%) Americans correctly
recognize that the most affordable time to buy life insurance is
when they are young and healthy, the number one reason keeping
individuals from buying life insurance is cost, with nearly half
(45%) of those who do not have coverage saying cost was a reason
for why they have not yet purchased a life insurance policy.
At the same time, many Americans do not appear to have a clear
picture of the affordability of life insurance. Only about 1 in 10
(11%) could correctly identify the approximate monthly cost for a
healthy 30-year-old to get a 20-year $250,000 term life insurance
policy. The price for this example policy is typically around $15
per month,1 but 16% expect the price to be more than triple this
amount, another 16% expect it to be more than double, and 41% are
not sure.
“Life insurance is a cornerstone for a secure financial plan,
but misperceptions around cost deter too many people from making
this important protection a part of their overall strategy,” said
Tim Heslin, President of Life Insurance at Corebridge Financial.
“Regardless of your stage in life—whether you’re getting married,
starting a family, sending a child off to college, or preparing for
retirement—it’s important to evaluate your life insurance needs so
you can help protect your loved ones and help secure your financial
future.”
Life insurance runs in the family
One key determinant of whether someone has life insurance is if
those they love are insured. This is particularly true for
individuals whose spouse has a life insurance policy, as well as
for those who are listed as a beneficiary on a life insurance
policy. Nearly half (49%) of those whose spouse has a life
insurance policy have purchased their own coverage, compared to
just 10% of those whose spouse does not have a life insurance
policy. Similarly, 43% of respondents who are listed as a
beneficiary on someone else’s policy have purchased their own
coverage, compared to 15% of those who are not.
Testing well on life insurance basics
The new Corebridge Life Insurance Insights & Awareness
research identifies where Americans have a strong understanding of
important life insurance concepts. When presented with a series of
true or false questions, a majority of respondents answered
questions about the following correctly:
- Converting term life insurance to permanent life insurance –
72% correctly answered that a term life insurance policy can be
converted to a permanent one before the end of the policy.
Converting term life insurance to a type of permanent insurance is
relatively easy and does not typically require a medical exam, even
if your health has declined.
- Living benefits – 72% correctly answered that life insurance
can provide benefits while you’re living. Permanent life insurance
policies can offer features that may create a lifetime income
stream, give you tax-free2 access to available cash value, or help
you financially deal with life’s challenges.
- Leaving a legacy – 71% correctly answered that life insurance
can be used to leave a donation to charity. While many will name
their loved ones as beneficiaries, other options include using your
policy’s death benefit to honor your school, give to a hospital
important to your family, or help another cause you are passionate
about.
Room to learn about different types of life insurance
While Corebridge Life Insurance Insights & Awareness finds
the most prevalent misunderstanding about life insurance is
overestimating cost, the new research also reveals that Americans
have an opportunity to learn more about the differences between
term life insurance and permanent life insurance, and the specific
benefits that these different types of coverage can provide:
- Death benefit amount is not always fixed – 61% incorrectly
answered that the payout at death for all life insurance was fixed
at time of purchase and does not change. While term life insurance
policies generally set a fixed level for the death benefit, for
many permanent policies the death benefit can change over time, as
a result of policy owner choices. For instance, individuals with a
permanent life insurance policy will see their death benefit change
if they take out additional coverage, or if they make withdrawals
or use policy loans from the cash value to help meet other
financial goals or needs.
- Permanent policies can build cash value, not term – 60%
incorrectly answered that term life insurance allows the
policyholder to build cash value. This feature is available with
permanent life insurance, where a portion of the premium may go
toward building cash value that can grow over time as you earn
interest and make premium payments.
- Premiums are level for term but not always for permanent life
insurance – 49% incorrectly answered that premiums increase every
year with most term life insurance policies. In most cases,
premiums do not change across the term period of such a policy;
however, certain permanent policies such as universal life
insurance have flexible premiums that allow the policyholder to pay
more or less, depending on, for example, their goals for growing
the cash value of the policy, premiums increasing as they age, or
whether the cash value has grown enough to partially or fully pay
for the policy.
“When people think about life insurance, it’s the protection
that life insurance provides for loved ones that typically first
comes to mind, and rightly so,” said Heslin. “Permanent life
insurance can offer a broad range of benefits that go beyond
passing money down to your beneficiaries, and Life Insurance
Awareness Month is the perfect time to take action and familiarize
yourself with everything life insurance can offer. Meeting with a
financial professional or insurance agent is a smart first step to
help you understand the nuances between different types of coverage
so you can select a policy that fits your needs and can become
foundational to your financial plan.”
When asked to consider which life insurance benefits are
important for their overall financial plan, Americans found value
in both the death benefit as well as the additional living benefits
that permanent life insurance features. Nearly 6 in 10 (58%) said
leaving money to their loved ones when they die so they can
maintain their lifestyle would be an important part of their
financial planning. Further, 71% of respondents cited one or more
of permanent life insurance's several living benefits as valuable
to their financial plan, such as access to the cash value of life
insurance, help in providing a supplementary retirement income
stream, or help in financially dealing with life’s challenges.
During Life Insurance Awareness Month this September, Corebridge
Financial will be encouraging more people to take action to improve
their life insurance knowledge and learn how life insurance can
play a role in their financial planning. Additional insights on
Corebridge Life Insurance Insights & Awareness and other life
insurance topics can be found at Corebridge Insights &
Education.
Methodology
The 2024 Corebridge Life Insurance Insights & Awareness
survey was conducted online by Morning Consult on behalf of
Corebridge Financial between June 18 - June 20, 2024, among a
national sample of 2,204 adults.
About Corebridge Financial
Corebridge Financial, Inc. (NYSE: CRBG) makes it possible for
more people to take action in their financial lives. With more than
$390 billion in assets under management and administration as of
June 30, 2024, Corebridge Financial is one of the largest providers
of retirement solutions and insurance products in the United
States. We proudly partner with financial professionals and
institutions to help individuals plan, save for and achieve secure
financial futures. For more information, visit
corebridgefinancial.com and follow us on LinkedIn, YouTube and
Instagram.
Policies issued by American General Life Insurance
Company (AGL), Houston, TX except in New York, where issued by
The United States Life Insurance Company in the City of New
York (US Life). AGL does not solicit, issue or deliver
policies or contracts in the state of New York. Policy Form
Numbers ICC21-19310 Rev0321, ICC21-19311 Rev 0321, 19310-10 Rev
0321, 19311-10 Rev 0321, 19310N-33 Rev 0321, 1931N-33 Rev 0321;
Rider Form Numbers: ICC14-14012, 14012, 14012N, ICC23-23601, 13601,
13601N, ICC14-14001, 14001, 14001N, ICC22-22995, 22995, 22995N.
Guarantees are backed by the claims-paying ability of the issuing
insurance company and each company is responsible for the financial
obligations of its products. Products may not be available in all
states and features may vary by state. Please refer to the policy
for more information.
All companies above are wholly owned subsidiaries of Corebridge
Financial, Inc. Corebridge Financial and Corebridge are marketing
names used by these companies.
This material is general in nature, was developed for
educational use only, and is not intended to provide financial,
legal, fiduciary, accounting or tax advice, nor is it intended to
make any recommendations. Applicable laws and regulations are
complex and subject to change. Please consult with your financial
professional regarding your situation. For legal, accounting or tax
advice consult the appropriate professional.
© Corebridge Financial, Inc. All rights reserved.
1 Male, 30-year-old, preferred non-tobacco, Select-a-Term,
$250,000, 20-year duration; rates as of March 9, 2024. 2 Based on
current federal income tax law. Assumes the use of withdrawals to
basis and/or policy loans. If the policy is classified as a
modified endowment contract (see IRC section 7702A), withdrawals or
loans are subject to regular income tax and an additional 10% tax
penalty may apply if taken prior to age 59 ½.
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