Oh, boy, the times they are a-changing–a new study by LIMRA and the LIFE Foundation finds that a sea change is taking place in the life insurance world. Increasingly, consumers are shifting toward a direct buying method for insurance products.
The good news, for any traditionalists out there, is that 64 percent of consumers still prefer to buy life insurance “from an insurance or financial professional face-to-face.” The bad news is that number has dropped from 80 percent in 1996. The study also found that 26 percent of consumers prefer to purchase life insurance through the Internet, mail or over the phone.
“Obviously, the Internet has fundamentally changed consumers’ buying practices over the past 15 years,” says Marvin H. Feldman, CEO of the LIFE Foundation. “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.”
Some other key points from the study: 86 percent of consumers generally consider life insurance, but only 70 percent believe they “personally need life insurance.” And, worse still, only 63 percent of those surveyed say they own life insurance.
More findings from the study:
- Consumers want to know what they don’t know. “When asked about factors that are important to them when buying life insurance, understanding what they are buying ranks highest among Americans (36 percent), followed by obtaining the proper amount of coverage (22 percent).” Women (39 percent) want to be certain about what they’re buying while 32 percent of men want that same information. Men on the other hand, “place greater importance than women on getting the best price”: 17 percent versus 11 percent.
- The price barrier. According to the study, there remains a price disconnect for consumers, “even though the cost of basic term life insurance has fallen by about 50 percent over the past 10 years.” In fact, the study revealed that “the cost of life insurance is the top reason people give for not having enough life insurance.”
- Leaving a legacy. Of those surveyed 89 percent say the main reason they own life insurance is to “cover burial and other final expenses followed by replacing the income of a wage earner (65 percent).” And 62 percent see the policy as a way to transfer wealth or leave an inheritance.
According to Robert Kerzner, president and CEO of LIMRA, “The psychology of a life insurance purchase is very complex, and the results of this new study bear that out.” Kerzner adds that by getting “a better understanding of evolving consumer trends and preferences, like the use of technology and the Internet,” such information will translate to companies and advisors more “effectively reaching more consumers” and thus, more people owning life insurance.