Many Americans Know the Basics of Life Insurance, Yet Nearly 60% Either Don’t Have Coverage or Are Unsure If They Do
Ahead of Life Insurance Awareness Month, New Corebridge Financial Research Reveals How Misunderstandings Around Cost Contribute to Life Insurance Coverage Gap
Misunderstandings around cost could help explain this life insurance coverage gap. While 8 in 10 (
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 (
“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 (
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:
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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:
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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 (
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
Policies issued by American General Life Insurance Company (AGL),
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.
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1 Male, 30-year-old, preferred non-tobacco, Select-a-Term,
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
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Source: Corebridge Financial