LIMRA: 70% Fail To Understand Insurance
January 18, 2013 by Catherine Theroux
WINDSOR, Conn., Jan. 17, 2012—Recently,LIMRA provided a life insurance IQ test to 4,000 Americans to gauge their knowledge and understanding of life insurance. Less than a third (1,200) passed the 10-question exam and the majority (55 percent) answered fewer than five questions correctly.
“In addition to identifying the aspects of life insurance that consumers understand and where consumers admit to being in the dark, the study also shed light on some widespread misperceptions,” said Jennifer Douglas,LIMRA associate research director for strategic and developmental research. “With life insurance ownership at an all-time low, it is important that the industry not only overcome consumers’ lack of knowledge about life insurance but address the misinformation that is out there confusing them and possibly having a negative impact on their image of the industry.”
LIMRA researchers identified a number of factors that were associated with higher life insurance IQs among the survey respondents:
If the person cited multiple sources of information attributing to their understanding of life insurance
If the person owns individual life coverage
If the person’s primary source of information is through their occupation, some sort of seminar, or a financial planner
If the person is older
If the person has a higher degree of confidence in the life insurance industry
If the person has a higher level of education
If the person has higher household investible assets
If the person is male
If the person views life insurance as important
Less than one percent of those surveyed answered all ten questions correctly. (Take the quiz and compare your knowledge).
What does this mean for the industry?
“One of the top reasons consumers give about why they don’t buy life insurance is because it is ‘too confusing,’” noted Douglas. “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. The study offers companies an in-depth view on what consumers know and the factors that contribute to better understanding of life insurance, helping them take the right steps to increase Americans’ comfort level with the industry and its products.”
