Insurance agents are still the preferred way to buy life insurance for many Americans, but they are increasingly turning to direct methods of purchase such as online, phone or mail orders, a survey released Wednesday found.
The survey, “The 2011 Insurance Barometer Study,” conducted by Harris Interactive for LIMRA and the nonprofit LIFE Foundation, found that nearly two-thirds of consumers prefer to buy life insurance from an agent, but that has fallen from 80% in 1996. Today, 26% of consumers prefer to use the Internet, phone or mail to purchase life insurance.
It should be no great shock that the youngest consumers are the most likely to use the Internet to purchase insurance. The survey found that while adults between 25 and 44 were slightly more likely to prefer direct methods of purchase overall (30%), of those, three-quarters prefer the Internet to phone or mail.
While 64% of consumers still prefer to purchase insurance through an agent or advisor, the Internet still plays a role in their decision. Over half of consumers shopping for insurance researched the purchase online, but ultimately bought from an advisor.
“Obviously, the Internet has fundamentally changed consumers’ buying practices over the past 15 years,” Marvin Feldman, president and CEO of the LIFE Foundation, said in a press release. “Recognizing the growing consumer interest to use the Internet to conduct research and buy life insurance, life insurance companies and agents have developed and implemented innovative strategies to engage and serve consumers through their websites and social media platforms that are more convenient for the customer.”
Consumers generally agree that life insurance is important; 86% said that “most people” need it. However, when asked if they needed life insurance, just 70% thought they did and only 63% already owned some sort of life insurance.
Feldman admitted that for consumers, there are several barriers to purchasing life insurance.
“Life insurance has never been as easy or inexpensive to buy, yet millions of Americans continue to put off making a purchase that they, by their own admission, say is an important one,” he said.
Yet bargain hunting isn’t consumers’ primary goal when looking for a policy. Just 14% of consumers said getting the best price was important to them, although men were slightly more likely than women to place greater importance on price. Understanding the product and getting the right amount of coverage were the two most important factors in consumers’ purchasing decisions.
The study found 22% of consumers are concerned about getting the right amount of coverage, largely because of concerns over price. Eighty-five percent of consumers haven’t purchased more insurance, even though they think they need it, because it is too expensive. Having other financial priorities and being unsure about how much or what kind to buy were also top concerns.
Regardless of income level, 62% of respondents see life insurance as a way to transfer wealth, the study found. Almost half are worried about having enough money for a comfortable retirement, and 42% are worried about paying for medical expenses.