Consumer Interest In Life Insurance Is Growing, LIMRA Finds
By Trevor Thomas
A 30-year decline in household ownership of individual life insurance policies appears to have ended, according to LIMRA International, Windsor, Conn.
A new LIMRA study found that 50% of U.S. households owned some individual life insurance, the same level as the last time it surveyed consumers on the topic, in 1998.
LIMRA also found that 44% of U.S. households believe they need more life insurance, and 27% actually intend to buy policies in the next year.
All told, that adds up to 29 million households planning to buy more life insurance in the coming year, LIMRA calculated.
If everyone who needs coverage actually bought it, the total coverage potential would be $4.8 trillion and would add an extra $9 billion to annual industry revenues, it estimated. That would be almost double the amount of new premium now written.
For producers and carriers, the survey carries an important message, says Robert A. Kerzner, president and CEO of LIMRA.
“First, more are considering [life insurance] than ever,” he says. “They are saying, I know I need it. We know they all wont buy, but its a tremendous opportunity for the industry.”
The survey also offers crucial clues as to why consumers buy life insurance, he notes.
Product guarantees, for instance, are significant. Consumers singled out fixed-premium, guaranteed death benefit and lifetime coverage as the most important policy features.
Asked why they buy life insurance, 66% said replacing lost income in the event of a wage-earners death, while 42% cited covering burial costs and 33% cited paying off a mortgage.
Of all households, 45% agreed that life insurance is the best family financial protection against premature death of a primary wage earner.
The survey also found that 28% of households have no life insurance at all.
Households that plan to buy more insurance in the next 12 months currently have enough to replace only 3.7 years of income. LIMRA estimated average households need 6.1 years of income replacement, or an additional $163,000 of insurance.
Paul Graham, vice president and chief actuary of the American Council of Life Insurers, Washington, notes many insurers recommend even higher levels of wage replacement for most households.