Top Reasons People Don't Buy Life Insurance | Farm Bureau Financial Services (2024)

FAQs

Why are people not buying life insurance? ›

Life Insurance Is Too Expensive

Many people overestimate the true cost of life insurance and believe that it is too expensive for them. It is true that the cost of life insurance can vary based on several different factors, but getting coverage can be more affordable than you think.

As mentioned above, the cash value within a life insurance policy generally grows income tax free and capital gains tax free. You may not need life insurance if you pay little or no income tax or capital gains tax on investments, or have losses that will be applied against income or gains for the foreseeable future.

People are typically denied life insurance because they fall into a high-risk category. This is often due to health challenges like diabetes, obesity or a previous diagnosis of serious disease.

There are likely many reasons for that drop-off. For one, younger generations are deferring big financial and life milestones such as getting married, buying a home and having kids relative to older generations. Each of these events generally acts as a key trigger to buy life insurance, experts said.

The subject is boring and morbid

If you really don't like to think about death, you're not alone. Death is an unpleasant subject, and life insurance raises issues of our own mortality. Some people say that the very thought of starting the life insurance buying process makes them feel stressed out.

If you have enough savings to support all the people who depend on you and cover all your monetary commitments, you may not require life insurance for income replacement if you pass away.

The cash value is slow to grow

But this takes a while, so it can take 10 to 15 years (or even longer) for you to build up enough cash value to borrow against. If you'd prefer an investment that offers positive returns quickly, you'll want to look elsewhere.

Cons of life insurance

One disadvantage of life insurance is that the older you are, the more you'll pay for a policy. This is because you're more likely to pass away during the policy period than a younger policyholder and will, in turn, cost the life insurance company more money.

At What Age Is Life Insurance No Longer Needed? Life insurance is no longer needed for many people once they reach their 60s or 70s. At this point they have retired, their kids have grown up, and they've paid off their mortgage and other debts.

People often don't have health insurance because they think they can't afford it. That's the most common reason people don't have health insurance, according to the KFF. A KFF survey found that the top reasons people don't purchase health insurance are: Coverage not affordable: 64%

What disqualifies you from life insurance? ›

Pre-existing conditions – meaning any health issue or condition that existed before applying for coverage – are often considered high-risk by insurance companies and can lead to disqualification. Chronic conditions that require long-term medication or treatment can also impact eligibility.

We have seen claims denied for failure to disclose use of a seasonal allergy inhaler, substance abuse treatment, and even the insured's height weight measurements. The most common lie told on life insurance applications is the use of nicotine.

One of the most common reasons people don't buy life insurance is that they perceive it as too expensive. However, life insurance premiums can vary widely depending on the type of policy, coverage amount, and individual factors such as age, health, and lifestyle.

Reasons not to buy life insurance can include not having beneficiaries, not having beneficiaries who need financial support in the event of your death, or not having enough cash flow to pay for premiums.

Not everyone needs life insurance. People who've accumulated enough wealth to cover their final expenses and who don't have dependents can usually forgo paying for life insurance.

It's an additional expense. Most millennials tend to view life insurance as a burden rather than a necessity and hence would rather not incur the additional expense of paying premiums in their monthly budget.

Cons of life insurance

One disadvantage of life insurance is that the older you are, the more you'll pay for a policy. This is because you're more likely to pass away during the policy period than a younger policyholder and will, in turn, cost the life insurance company more money.

A study by the LIMRA and Life Happens shows that in 2023, the percentage of people who reported having life insurance increased to 52%, up from 50% in the previous year. Over the past 12 years, there has been a decrease in overall life insurance ownership, dropping from 63% in 2011.