Why More People Don’t Buy Life Insurance


A 2010 study by the Life Insurance and Market Research Association showed that 56% of Americans do not have an individual life insurance policy, and that 30% have no life insurance at all. Worse, those numbers are on the rise.

It’s easy to write this dilemma off to a bad economy, or to the rising cost of all other types of insurance, but there may be other issues at work here.

Life insurance is not a legal requirement

There is no legal requirement to maintain life insurance. Most people will not take on any expense they are not absolutely required to have, so life insurance is often missing in action. At the opposite end of the spectrum, most people do have auto insurance. The law requires it, otherwise you can’t drive. And even then, millions of people will drive without in any way.

Though it doesn’t relate to legal requirements, many employers provide group health insurance plans at subsidized rates. Though not everyone takes advantage of this benefit, most do simply because it is available. However, as health insurance is not yet a legal requirement, tens of millions of people who are not part of employer group health plans are going without coverage there as well. Just as with life insurance, there’s no legal requirement to do so.

No current benefit

People are often reluctant to join a plan that provides no immediate benefit. Not only does life insurance not provide an immediate benefit, but it doesn’t provide any at all as long as you are alive. It’s likely that many people are turned off by the idea that they will not personally benefit from having a life insurance policy.

This is the exact opposite of health insurance and auto insurance. If you get sick or injured, or you’re involved in an auto accident, your policies will provide an immediate benefit. People understand illness, injury and car accidents, and the potential impact that they will have on their lives. Since the potential risks are more obvious, and insurance can cover those risks, people are more likely to see health and auto insurance as being a necessity.

Fear of death

There are people who have an intense fear of their own death. It’s not that any of us are somehow okay with that prospect, but some people fear it to the degree that they don’t want to talk about it, and don’t want to plan for it either. Some might even believe that planning for their own death, such as buying life insurance, is like willing it to happen.

I have the opposite view. The real fear isn’t death itself – we all know we’re going to die one day – but more the prospect of premature death. But my thinking is that something is less likely to happen just because we have planned for it. Life insurance is part of that planning. If we have an adequate amount of coverage, we get on with our lives and don’t worry about premature death – or at least not the financial side of it.

Disbelief in their own death

Many people cannot imagine the world without them. It’s not so much that they fear death as much as they can’t conceptualize it happening (TV might have something to do with this). This could be manifested in thoughts and sayings like:

  • “I’m too young to die”
  • “I’m too busy to die”
  • “I’m too healthy to die”
  • “I have too much to live for”
  • “I have too much to do before I die”

Most of us think that too, but we’re also aware of the fact that life often has other plans for us. That’s why we all need life insurance.

Other types of insurance are “more important”

In all spending decisions there’s always the debate between luxuries versus necessities. When it comes to insurance, we may see health and auto insurance as necessities, and life insurance as a luxury even though it is not expensive in most cases. For all the reasons given above, it’s easy enough to see where this conclusion comes from.

But while life insurance may not be seen as a necessity while we’re alive, it will absolutely be one when were gone. Not to us – but to our dependents and survivors. Life insurance is our last, best chance to take care of our loved ones.

That fact alone makes it a necessity.