Life insurance can be a lifeline to those who are left behind when a loved one dies. It can help the surviving spouse take care of children without fear of losing the family home, and it can pay off any medical bills that may have accumulated before that person died.
That financial help can be a tremendous relief for someone who is grieving over their loss and doesn’t need money trouble to add to that stress. To learn more about how people view life insurance, LendEDU surveyed 1,000 U.S. residents. That survey revealed some interesting results.
More Than Half of American Adults Have Life Insurance
Just over half of Americans carry life insurance. Specifically, 54 percent of respondents said they do have it and 44 percent said they don’t. Another 2 percent said they didn’t want to say whether they had such insurance.
People who responded to LendEDU’s survey cited a variety of reasons for holding life insurance policies, including:
- 35 percent said they wanted to replace lost income for family in case something happened to them.
- 30 percent sought to cover burial expenses.
- 13 percent did so solely because they know it’s important to have it.
- 6 percent aimed to pay off their family’s debt.
- 6 percent said they did it because it was recommended that they get a policy by a trusted source.
- 4 percent cited another reason not listed.
- 3 percent said they wanted to build cash value.
- 1 percent did it to pay for their family’s college expenses.
- 1 percent said they were diversifying their investments.
- 1 percent said they did it for business planning purposes.
Of those who said they are carrying life insurance, 46 percent said they found their policy by a referral from someone they know. Another 24 percent found their policy through an insurance agent. Financial advisors referred another 14 percent of those surveyed to a specific company.
Researching options online led 11 percent to the company that handles their policy. The remaining 5 percent found their policy through a television ad, the internet, or in person.
Whole Life Policies Are Slightly More Common Than Term Life Policies
Whole life insurance policies were the most popular choice, according to the LendEDU survey results. A total of 41 percent of respondents opting for whole life policies, while 38 percent said they carry term life insurance. Another 20 percent weren’t sure which kind of policy they have, and 1 percent preferred not to say.
The reasoning behind choosing a term life insurance policy instead of a whole life insurance policy varied. The biggest reason came down to cost, with 49 percent saying term life policies were more affordable. Flexibility was the other main reason, with 30 percent saying they wanted specific terms.
Another 11 percent said they chose term life insurance because it was recommended to them by a person they trusted. “Other” or none of the listed reasons compelled 10 percent of people to choose term over whole life.
When asked why they chose whole life over term insurance, respondents roughly evenly reported a different primary reason. A trusted source led 32 percent to make that decision, while another 32 percent said they thought getting a whole life policy offered better value.
Another 27 percent said they preferred a whole life policy because they wanted a policy with a longer term. In total, 9 percent said they chose whole life for another reason not listed or said none of the reasons listed applied to their decision.
Most Policy Holders Believe Life Insurance is Worth the Cost
An overwhelming 83 percent said their policy is worth the cost, while only 7 percent didn’t think the cost was justified. Another 10 percent said they weren’t sure if the policy was worth the cost.
Interestingly, the majority of people surveyed – 67 percent – said they have a grasp on how their policy works, but 33 percent admitted that they don’t fully understand how their policy operates.
What About Those Who Don’t Have Life Insurance?
Almost half of those surveyed (44 percent) said they don’t have a life insurance policy.
The most-cited reason for not carrying life insurance seemed to be cost, with 44 percent saying they can’t afford it. Other reasons for not carrying a policy include:
- Hadn’t thought about it (20 percent)
- Didn’t think the policy was worth the cost (12 percent)
- Too intimidated or confused by the process (6 percent)
- Didn’t qualify (1 percent)
In addition, 17 percent said they didn’t get a policy for a reason that wasn’t listed on the survey.
Of those who don’t have life insurance, 53 percent said they planned to get it in the future, while 18 percent said they didn’t plan to do so. Another 29 percent said they weren’t sure if they would get life insurance in the future.
The Bottom Line
The picture of term life insurance and whole life insurance popularity is mixed for a variety of reasons. People tend to prefer whole life insurance over term by a small margin. The majority of people do carry some form of life insurance, but many do not. And those who don’t have it most often cite the cost as the reason preventing them from carrying a policy, according to LendEDU’s survey results.