Along with LIMRA, the LIFE Foundation recently released a new study, the Life Insurance Barometer Study. Our findings showed that Americans, especially younger Americans, prefer to buy life insurance via the Internet, mail or by phone. Although 64 percent of consumers are still buying life insurance from a professional, far fewer are doing so than in the past. (In 1996, for example, 80 percent preferred to purchase life insurance from a broker, face-to-face.) Now, just 26 percent of consumers prefer to buy life insurance directly.
The Internet has changed consumers’ buying practices over the past 15 years, and we need to recognize the growing consumer interest in using technology to conduct research and buy life insurance. Our industry needs continue to develop and implement innovative strategies to engage and serve consumers through company websites and social media platforms that are more convenient for these customers and, in many cases, are also more convenient for agents.
The study found that 86 percent of consumers agree that most people need life insurance, but there is a disconnect between thinking the product is needed and making the decision to purchase. Only 70 percent of our respondents thought they personally needed life insurance, and just 63 percent said they own any type of life insurance.
In today’s market, life insurance is cheap and easy to buy, but millions of Americans continue to put off making the purchase that they say is an important one. Why? Perhaps because no agents are calling on them. This is a problem we need to correct.
The cost factor
The study also revealed a number of other critical points. First, individuals rank understanding what they’re buying as the most important factor in their purchasing decision, followed by obtaining the proper amount of coverage. Price ranked fourth out of six factors, with only 14 percent saying it was most important to them.
Yet worries over price keep people from buying more insurance. Although the study states that the cost of basic term life insurance has tumbled by approximately 50 percent over the last decade, consumers still think life insurance costs too much. Of insured individuals who say their coverage is inadequate, 85 percent say cost has prevented them from buying more, followed by 76 percent who cite other personal financial priorities and 55 percent who say they don’t know what to buy.
Study findings reveal that the most common reason people own life insurance is to cover burial and other final expenses followed by the death of a wage earner, while 62 percent of individuals of all income levels say they see life insurance as a way to transfer wealth or leave an inheritance.
The report also found that 46 percent of respondents are extremely concerned or very concerned about having money for a comfortable retirement, followed closely by the 42 percent who are worried about paying for medical expenses. Only 27 percent said they are extremely or very concerned about dying prematurely and leaving family in a precarious financial situation, even though many Americans don’t have any life insurance or are inadequately insured.