According to the recent “U.S. Individual Life Insurance Sales Survey” by LIMRA, sales of individual life insurance improved for the second consecutive quarter of 2010, clocking in at 7%, with a 9% increase for the first half of the year. This is promising, according to Ashley Durham, senior analyst, LIMRA product research. “Keep in mind,” said Durham in a statement, “that’s compared to the first half of 2009, which experienced the steepest six-month drop in individual life insurance sales in almost 70 years.”
But the issue of whether to buy or not is still a major decision for many. Not only has life insurance been in a slump the likes of which have not been seen in nearly four score years, but, according to another LIMRA study, “Trends in Life Insurance Ownership,” ownership of individual life insurance policies is at its lowest in 50 years. This study, conducted every six years, found that 30% of households have no insurance at all, up from 22% in 2004.
Households with children under 18 with no insurance stand at 11 million. Four in 10 of those families say they’d be in immediate financial trouble if their breadwinner died. Three more estimate that they’d only be able to get by for several months before running into problems meeting their bills.
LIMRA also found that one in four people rely on life insurance coverage at work, with 15% reporting loss of that coverage due to one or more job losses in the household. Moreover, says Bob Kerzner, president and CEO of LIMRA, the organization’s studies show that one reason people fail to purchase insurance, aside from the obvious reasons of having more immediate needs, or less disposable income, is that they aren’t sure how much or what kind to buy; they are afflicted with “analysis paralysis” and end up doing nothing at all. “What our studies indicate above all,” he says, “is that in financial decisions, whether life insurance or investing, if people aren’t certain of what exactly is the right answer, they will do nothing. …That’s where the advisor could in fact make a huge difference, by providing some of that direction. Our studies still indicate 60% of Americans want face-to-face help in these kinds of decisions.”
Another option that is becoming more prominent during the recession is the option to convert a level term policy to whole life. This allows the policyholder to have some insurance–cheaper term coverage–while keeping the option of being able to exchange it for whole life coverage before the end of the term, or by a certain age of the insured, or for a specified number of years’ duration of the term policy.