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Consumers Overestimate Cost of Life Insurance by Nearly Three Times

Thursday, July 12, 2012

The 2012 Insurance Barometer Study is the 2nd annual survey designed to increase understanding about consumer attitudes and behaviors regarding a host of insurance and financial planning matters.

The new question in this year’s survey asked survey respondents to “estimate the annual cost of a 20-year, $250,000, level-term life policy for a healthy 30-year old consumer. The actual cost is roughly $150, but Americans estimate the cost at $400. Younger adults, who are most likely to qualify for preferred pricing, overestimate the cost by nearly seven times the actual cost.”

Marvin H. Feldman, CLU, ChFC, RFC, president and CEO of the LIFE Foundation said, “If people think that something is too pricey, they often won’t give it a second thought… Our industry needs to do more to help educate people about the true cost of protecting their loved ones.”

One of the top reasons consumers cited for not obtaining life insurance is that the product is “too expensive” (83 percent), second only to those who say they haven’t purchased more because they have “other financial priorities” (85 percent).

If you don’t know what you(r clients) are being charged for cost of insurance charges (COIs), fixed administration expenses (FAEs), cash-value-based “wrap fees” (e.g., M&Es) and  premium loads then you don’t know if they are being over-charged, or what you should be expecting in charges. This Barometer Study clearly shows that consumers currently do not know what they should be charged or what they should be expecting in charges within a life insurance product.  Show them not only what their charges are inside their product, but with a Veralytic report you can show them how their charges compare to industry benchmarks as well.

Veralytic is simply the fastest, easiest, and most comprehensive and cost-effective way to independently verify to clients and their advisors whether or not the pricing and performance of existing or proposed life insurance is in their best interest.  Only Veralytic is accepted for independent client representation, endorsed by the New York Bankers Association (NYBA) and compliant with industry regulations and established case law.

Use the Veralytic Reports to determine the appropriateness of pricing, the reasonableness of performance expectations for invested assets underlying policy cash values, and overall suitability for your (client’s) policies based on the 5 factors of suitability.  Click here and get up to 3 Veralytic research reports under our NO-Risk trial subscription.

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