For many producers, the potential of the affluent market lies in providing accumulation or wealth management products and services. But what about more profitable risk products, life insurance in particular? Is there any potential?
Opinions differ. Some feel the market for new life insurance sales is limited. However, ample evidence suggests there are tremendous sales opportunities for life insurance if you address the right needs.
The affluent market
Different people define the affluent market in different ways, but most use some level of assets or net worth. I will define affluent households as those with $500,000 or more of investable assets. This definition describes about 7% of U.S. households.
While most of us can only dream of being in that good a financial situation, the affluent market does not describe itself as “affluent”–only 12% describe themselves that way. Affluent individuals are more apt to characterize their situation as “financially comfortable” (40% see themselves that way). This may seem inconsequential, but if you do not see yourself as affluent then you worry about protecting the wealth you have.
Life insurance ownership
One of the stronger arguments that the affluent market for life insurance is saturated is the fact that 85% of affluent households already own a life insurance policy. And only 16% of affluent households believe they need more life insurance, which is almost three times less than the general public.
The most common reasons for owning life insurance, even with the affluent, are to pay final expenses and to replace income in the event of premature death. If this is how you are selling life insurance, then the affluent market is saturated. A life insurance needs analysis on a typical affluent household will indicate the household is over-insured by $300,000 or more.