Framing the value of life insurance for prospects in terms of retirement security will be key to the industry’s future growth.
So said Michael Smith, CEO of Insurance Solutions at Voya Financial, during an afternoon keynote today at the annual Insurance Executive Conference. Hosted by Summit Professional Networks, the session explored opportunities for industry growth in the coming years.
“Americans are more focused on retirement than on any other financial concern,” said Smith. “Retirement security also tops the list of concerns among employees.”
He added that, though the industry has made progress in focusing Americans on retirement security, ownership of a key component of that security — life insurance — continues to decline. This despite the fact that consumers “recognize the need for life insurance” and plan to buy a policy “eventually.”
The disconnect, said Smith, has positioned the insurance industry for “long-term, sustainable growth.”
But to achieve that growth, the industry has to educate consumers about the product’s dual function in retirement security: financial protection and cash accumulation. The outreach also needs to target demographic groups key to the industry’s growth: (1) those in the middle market, (2) GenXers and (3) Millennials.
The market opportunity is especially great in respect to middle market consumers, a group comprising 52 million U.S. households with incomes ranging from $35,000 to $99,000. LIMRA data cited by Smith shows that more than half of these households have $10,000-plus of non-mortgage debt and would need to borrow to cover an unexpected $5,000 financial event.
“For these families, the loss of one income could result in a dramatic change to their standard of living and a significant setback to their retirement planning,” said Smith. “As an industry, we need to do a better job of educating the middle market about the benefits of our products.”