Young people are more likely to consider buying a life insurance policy through their bank than older generations, a study released Monday by LIMRA found.
"We also know these consumers are more likely to need life insurance than older generations,” Patrick Leary, assistant vice president of LIMRA distribution research, noted in a statement. “In addition, many of these younger consumers have no existing relationship with a life insurance agent or financial advisor so buying life insurance from their bank is not just another convenience—it provides an opportunity to get the financial protection these consumers really need.”
Advisors shouldn’t focus directly on life insurance when talking with young investors, Leary told AdvisorOne on Monday. Instead, they should approach the subject in terms of broader protection needs. “They may shut down if advisors start talking about specific product solutions,” Leary said.
It may also be helpful to talk about insurance in terms of debt cancellation, Leary added. Young investors often have accumulated high levels of debt through college costs or by purchasing their first house.
More than half of all respondents are aware they can purchase life insurance through their bank, but just 44% would consider doing so.
Although less than half of consumers appear willing to purchase insurance through a bank, Leary suggested the reason was the “historical perception of what banks do.” Consumers see banks as a way to save money and accumulate wealth, not as a source of products. Another reason, though, is simply that life insurance isn’t top-of-mind.
There is a distribution challenge as well, though, as advisors who work in banks aren’t necessarily receptive to including those types of products, Leary added.
The majority of consumers who go through their bank for insurance are looking for simple products, the report found.
Leary added that consumers who are likely to go through their bank for products tend to be more conservative than those who work with a financial advisor.
“You can’t take what your customers know for granted,” Leary said. “Advisors should frame [life insurance] as part of a larger accumulation and protection strategy.”