Survey: Here’s What People Will (and Won’t) Do to Save on Insurance Costs

Written by Ty Stewart

Having the right types and amounts of insurance coverage is a necessity of life for consumers. Yet the high costs can be a heavy financial burden for many consumers, and could even keep them from getting the coverage they need.

Many insurance shoppers or policyholders are willing to make changes to secure low-cost policies, finds a new survey from Simple Life Insure. We asked insured adults which policies are costing them the most — and what they’re willing to do to pay less.

Key Findings​​​​

  • Health insurance is king. It is rated the most important most expensive type of insurance to hold. About 9 in 10 people have health insurance, and 46.6% of these policyholders say their health insurance premium is their highest.
  • Even people with insurance tend to overestimate what it actually costs. Insured people think life insurance is 5 times more costly than it actually is, on average, and estimated auto insurance premiums to be 68% higher than the national average.
  • Car insurance is right behind health insurance in importance and cost. When it comes to lowering insurance costs, policyholders are most keen to lower their auto insurance rates.
  • Shopping around and comparing quotes is the most popular method to lower costs on health, car, and life insurance — about half of people would be willing to do so.
  • Tobacco users are fairly willing to cut back on these products to save on insurance. Of tobacco users, 42.8% say they’d quit to lower insurance costs and 40.4% would quit for cheaper life insurance.
  • Policyholders aren’t very willing to downgrade their insurance coverage or choices to lower costs, however. Most are more willing to make lifestyle changes to save on insurance, rather than choose a policy with less coverage.

Health and car insurance are rated most important

Health insurance and auto insurance are the most popular types of policies held by insured people.

chart showing different types of insurance

This is about in line with how people rate types of insurance in terms of importance or unimportance:

  • Health insurance is rated as very or somewhat important by 84.7% of policyholders
  • Auto insurance is considered important by 78.2%
  • Homeowners and renters insurance are rated important by 59.9%
  • Life insurance is viewed as important by 56.1%
  • Disability insurance is considered important by just 29.5%; insured people are actually more likely to say it’s not important (33.4%)

Insured consumers expect insurance to cost more than it does

Most people claim to have a good idea of the factors that affect their insurance costs. When asked to respond to the statement, “I know and understand the factors that impact my insurance premiums, costs, and coverage,” just over two-thirds (69.6%) agree with it. Just 12.0% disagreed, indicating that they don’t know much about how their insurance costs are determined.

When it comes to actually predicting costs, however, our insured respondents weren’t as adept as they might think. We asked respondents to estimate the average monthly premium for car insurance or life insurance in the U.S.

infographic showing the difference between what people think insurance costs vs actual real costs

The average estimate for car insurance was $200, about $81 higher than the monthly average of $119 — off by 68%.

Estimates were even further off base for a life insurance policy (specified with a 20-year term and $250,000 coverage), with the average estimate for a monthly premium at $215. That’s five times more than the average $47 life insurance premium across age groups. It’s also twice the $106 monthly cost of this policy for a man in his 60s, and nearly 17 times the average $13 monthly premium for a man in his 20s, per NerdWallet.

Health insurance costs the most — but people want savings on car insurance

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People say they face the highest premiums on health and auto insurance. Among insured people, 41.5% say their health insurance plans carry the highest premiums. Similarly, 36.5% say that this policy is their most costly.

Chart showing which types of insurnace consumers pay the most for

Despite facing the highest premiums on health insurance, however, most insured people say they’re most motivated to save on car insurance. In fact, 41.7% say they’d be most willing to take action to lower their auto insurance costs. In comparison, 36.7% say they’d be most motivated to save on health insurance.

Comparison shopping is the most common strategy to save on insurance

What are policyholders willing to do to lower their insurance costs? We asked respondents about the actions they’d be most likely to take in order to pay less for health, car, and life insurance.

Shopping around is the strategy people are most likely to use to save on health, car, or life insurance. Shopping around and comparing rates is a well-known strategy to save on almost anything, so it’s no surprise consumers are also willing to take this step for their insurance policies.

Here’s a look at what car insurance policyholders are willing to do to lower their costs on those premiums.

chart showing what consumers are willing to do to lower their car insurance premiuims

More than half of insured people (54.8%) say they’d shop around to save on car insurance, as well as health insurance (54.4%).

For car insurance, about 34.1% of consumers are willing to switch to a new insurer to lower their premiums. A similar but less popular strategy to save is choosing a smaller insurance agency; 16.6% are willing to do so for life insurance, and 19.6% for health insurance.

Driving safer to lower car insurance costs

While safe driving might not directly impact car insurance premiums, it does help create a clean driving record that’s free of driving citations and tickets. And many auto insurance companies will reward low-risk drivers by offering lower insurance rates.

So it makes sense that following safe driving practices is among the most common actions policyholders would be willing to take to lower insurance costs. Since it’s illegal to drive while under the influence of alcohol or drugs, it’s a good sign that 43.6% of auto insurance holders say they’d never do so. A third (32.1%) say they’d follow all posted speed limits to lower insurance rates, and another 27.5% say they’d be willing to take a defensive driving course.

In our survey, 20.9% of respondents admitted to texting while driving at least every three months. Yet 45.6% of drivers with car insurance say they’d never text while driving in a bid for affordable premiums.

Losing weight? Quit smoking? 2 in 5 would do so to cut insurance costs

There are plenty more ways to save, however, for those willing to accept some tradeoffs.

Being at a healthy weight and not using tobacco products can help you get lower premiums on both health and life insurance, for example. And our survey finds that insured people are willing to take steps to better their health or be safer in order to lower insurance costs.

When asking health insurance policyholders what they’d be likely to do to lower these costs, for example, 41.6% said they’d lose or maintain a healthy weight.

Among this group, tobacco users are surprisingly willing to quit or avoid tobacco products to lower health insurance costs — 42.8% said they’d be likely to take this action. Additionally, 24.2% of people who regularly use alcohol say they’d cut back on drinking to pay less for health insurance.

chart shows what consumers are willing to do in order to lower their health insurnance costs

Similarly, 40.4% of tobacco users with life insurance would quit or lessen their tobacco use to lower premiums on this policy. And 37.7% of people with life insurance said they’d trim or watch their waistlines to lower those costs, while 29.5% of policyholders who drink alcohol say they’d curb their consumption of alcoholic drinks.

There are additional good health practices that life insurance shoppers or policyholders could follow to keep costs low. Avoiding high-risk hobbies such as sky diving or rock climbing can result in lower life insurance rates, as well as diligently following doctors’ advice and treatment plans. Yet people were less willing to consider these strategies as ways to lower their life insurance costs.

Chart - what consumers will do to get lower life insurance premiums

Saving $306 a month on insurance would motivate most people to change their lifestyle

Quitting tobacco products can help you save on both health and life insurance, and maintaining good health and keeping weight low can help you score lower life insurance rates.

For people who might be overweight or tobacco users, however, qualifying for savings can require a significant change in lifestyle. We asked respondents what amount of monthly insurance savings would motivate them to make such a major change.

Overall, people would want to see significant savings in return for such a big change. The average savings that would motivate this kind of lifestyle shift is $306. The bare minimum monthly savings was $100; no respondent chose an amount below that, despite a sliding scale that began at $5 per month. Then there were 9% of people who selected the max amount possible of $500 per month.

Insurance customers are clear: they don’t want less coverage

While policyholders are willing to do a lot to lower their insurance costs, when they decide the amount of coverage they need they don’t want to accept less.

Insured people are less keen on accepting less coverage or limited choice in exchange for lower rates:

Health insurance: Just 17.6% say they’d consider a plan with a higher deductible or out-of-pocket costs to save on health insurance, while 15.6% might choose an HMO or limited-network plan.

Car insurance: 18.9% would consider a policy with liability-only coverage to save on auto insurance, and 16.1% are open to a plan with less coverage.

Life insurance: 16.3% say they might choose a life insurance plan with less coverage.

Fortunately, customers don’t have to compromise on coverage to get the protection they need. Insurance brokers such as Simple Life Insure can help you find a life insurance option that matches your and your family’s needs — and your budget. They’re familiar with what different insurers can provide, and can quickly connect you with those who can offer what you’re looking for.

Whether you work with a broker or go it alone, however, shopping around and comparing rates is indeed one of the easiest and most effective ways to save. Keeping tabs on other factors that affect insurance costs also ensures that the next time you’re shopping for a policy, you’ll be a good candidate for lower rates.

Methodology 

This survey was conducted by Simple Life Insure through Pollfish, collecting 665 responses on May 29, 2019 from adult insurance policyholders in the U.S. The survey only collected responses from online users who indicated they had a policy for at least one of these types of insurance: health, car, life, homeowners or renters, or disability.