Pop quiz: 70 percent fail life insurance IQ test
Less than a third of the 4,000 people who took a quiz on the basics of life insurance passed, according to LIMRA, a research and consulting firm that tracks the life insurance industry.
What's more, 55 percent answered fewer than five of the 10 questions correctly.
Ignorance of how life insurance works, however, is just part of the reason why sales of individual policies are at a 50-year low.
While research from LIMRA shows that most people find life insurance confusing, many also think it costs much more than it actually does. Add to that a sour economy and high unemployment, and it's no surprise that sales of individual life insurance policies sales are dipping. (See: "I'm not buying it – life insurance.")
Among those without policies, there are four groups facing the largest life insurance coverage gaps -- unmarried parents, large families, women and those with certain common health conditions, according to a report by Genworth.
"Consumers often believe life insurance costs nearly three times its actual price, and this is a major contributor to the large coverage gap we're seeing in these four groups," Brian Bulakites , vice president and national sales manager for life insurance at Genworth, said in a statement.
While it's true that the best time to buy life insurance is when you're young and healthy, affordable life insurance coverage is becoming more accessible for those who have been diagnosed with certain health conditions, thanks to advanced underwriting practices, says Bulakites. (See: "Pre-existing health conditions not always obstacle to good life insurance rates.")
Many commonly diagnosed health issues – such as asthma and depression – are no longer barriers to receiving preferred rates on life insurance, which is helping financial professionals close the gap for this group, according to Genworth. (See: Understanding life insurance table ratings.")
If you need a quick reference on life insurance basics, visit our section that covers what you need to know when considering buying a policy. And, if you need more motivation, read these intimate stories that also offer advice on purchasing life insurance that will best suit your needs.
Ron Lieber, New York Times columnist/Bucks blog:
Alden Wicker, Forbes/LearnVest :
Tim Kreider, The New York Times/Opinionator
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Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's.
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