With life insurance ownership at an all-time low in America, lack of education not just pertaining to why protection is needed but also to how the products work is pervasive.
Worldwide research and consulting company LIMRA, found Americans knowledge and understanding of life insurance is pretty dismal.
LIMRA provided a life insurance IQ test to 4,000 Americans in order to gauge their knowledge and comprehension of life insurance and it found that less than a third passed the 10 question exam with 55 percent getting fewer than five questions correct. Less than one percent of those surveyed answered all 10 questions correctly.
LIMRA found that respondents with high scores on the IQ test exhibited the following qualities: they cite multiple sources of information attributing to their understanding of life insurance; they own life coverage themselves; their primary source of information is through their occupation, some sort of seminar or a financial planner; they are older; they have a high degree of confidence in the life insurance industry; they have a high level of education; they have high household investible assets; they are a male; they view life insurance as important.
“One of the top reasons consumers give about why they don’t buy life insurance is because it is ‘too confusing.’ The study shows that consumers with a better understanding of life insurance have a higher level of confidence in insurance companies than those less knowledgeable about life insurance,” said Jennifer Douglas, LIMRA associate research director for strategic development and research.