INSURANCE INFORMATION INSTITUTE
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NEW YORK, January 21, 2009 — Almost three out of every five Americans have not purchased life insurance because they think it is too expensive, even though the cost of these policies has remained stable or even dropped over the past decade, according to the Insurance Information Institute (I.I.I.).
Besides citing the perceived high cost of life insurance (58 percent), consumers responding last year to a survey conducted on behalf of the Life and Health Insurance Foundation for Education (LIFE) also said that they just had not gotten around to buying it or did not know enough about life insurance to purchase a policy. Industry observers estimate that 68 million adult Americans have no life insurance, and many of those who do purchase far less coverage than experts recommend.
“If someone relies on you financially, you need life insurance,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “The premiums are very reasonable when you consider the level of protection you receive.”
There are two major types of life insurance—term and whole life.
Term insurance is a form of life insurance that pays if the death occurs during the “term” of the policy, which is usually anywhere from one to 30 years .The premiums rates for term policies are lower today than they have ever been.
If you are buying a short-term life insurance policy (under 10 years), look for renewal guarantees. A renewal guarantee gives you the right to start a new term after the current one ends, paying a higher premium based on your current age, but without requiring you to undergo a new health exam or submit any other “evidence of insurability.” Without the renewal guarantee, you would have to shop for life insurance all over again and, if your health has deteriorated in the interim, you might pay higher premiums or not get coverage at all.
Whole life insurance is sometimes referred to as “permanent” life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life. Unlike term life, permanent policies pay a death benefit whenever you die, even if you live to be over 100. Universal life is the most common type of permanent insurance policy, with traditional whole life the next most common type. The premium rates for whole life policies have generally remained stable in recent years.
“Look for a policy that meets your needs,” said Salvatore. “There are ways to save money when buying life insurance but they don’t always involve paying a lower premium immediately.”
The I.I.I. offers the following tips to maximize your life insurance dollars before and when you buy a policy:
Before You Buy
When You're Ready to Buy
The I.I.I. is a nonprofit, communications organization supported by the insurance industry.