Let’s begin with a quick look at the facts of life insurance.
About 50 million households—roughly 40%—say they need more life insurance.
The numbers bear this out. In 2002, 15.0 million individual life insurance policies were issued. In 2017, only 10.5 million were issued. This drop in the number of policies may have many causes, but the result is fewer families with the protection of life insurance.
One reason may be that people vastly overestimate the cost of life insurance, believing, on average, that it costs three times as much as it actually does.
Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
Sources: American Council of Life Insurers, 2018; LIMRA, 2018