Brits overestimate the price of life insurance by 394 per cent, while 47 per cent surveyed by SunLife also stated that they have no idea how much it costs.
A nationally representative poll of 18-65 year olds conducted online by Critical Research in February among 1,011 respondents, found the average amount people thought £100,000 worth of cover would cost is £50.98 a month.
This is almost five times more than the average premium of £10.31 a month, based on a 25 year term for a 38 year old (average age of SunLife term life insurance customer) and accepted on standard rates, rising to £20.14 per month for smokers.
SunLife also found that 47 per cent of people had no idea how much life insurance costs, with this rising to more than half (53 per cent) of those who cited affordability as the reason why they have no cover. It also appears the misconception of the cost gets worse with age, with 58 per cent of 55-65 year olds admitting they have no idea what life cover costs.
Of those that do not have life cover, a quarter were concerned that they do not have any in place, with one in 10 stating their family would lose all or most of its monthly income if they were to become critically ill or die.
Dean Lamble, managing director at SunLife, said that the misconception needs to be addressed.
“As an industry, we have an important role to play – we need to make life insurance more accessible so that more people realise they can afford it.”
Even amongst those who do have life insurance, the research revealed that only 39 per cent of people were certain they have enough cover. One in 10 said they know they are underinsured, while 15 per cent said they did not know how much cover they have in place.
Mr Lamble concluded: “It is worrying that there are many families out there that either have no life cover or insufficient cover in place simply because they are overestimating how much it costs.
“More than a quarter of those who don’t have life insurance say they are concerned about the fact they are not covered; we need to help these people get cover they can understand and afford so that, should the worst happen, they know their families are protected.”