Why don’t more people buy life insurance?
That’s the first question I ask Doug “Buddy” Amis, president and COO of Cary, NC-based Cardinal Retirement Planning, Inc., when I get him on the phone.
I know the potential answers to the question before I ask.
It’s too expensive.
I don’t need it.
I’ve already got it. I’ll buy it later.
I don’t want death insurance!
I know these responses as I’ve heard them before from other advisors. But I ask my question anyway, since I spent the morning sifting through the latest LIMRA report about maximizing life insurance sales opportunities.
According to the study, the sales potential of the underinsured U.S. life insurance market is $12 trillion. What’s more, the sales potential of the underinsured market is estimated to grow by $300 billion per year.
The key word here is “potential.” But, as entrepreneur and venture capitalist Evan Carmichael said, “Potential means nothing if you don’t do anything with it.”
So, I turn to Amis to help unlock that potential, ask him why more people aren’t insured, and why those who are insured don’t seem to have enough insurance.
“A lot of it has to do with education,” Amis says. He repeats all of those objections I listed above, and says that educating prospects and clients on the financial value and living benefits of life insurance can make the difference when it comes to selling more policies.
“In our practice, we always begin with education first,” he continues. “That’s the foundation of all of our relationships. Once the client understands the product, and we’re able to shed the stigmas and myths surrounding life insurance, then we can begin teaching the value.”
So, education is an icebreaker and creates a solid foundation for working with clients.
With that idea as a starting point, and with the help of Amis along with LIMRA researchers James T. Scanlon and Mary M. Art, I was able to deduce four key areas that will help agents and advisors unlock their life insurance sales potential.
Educating prospects and clients on the financial value and living benefits of life insurance can make the difference when it comes to selling more policies. (Graphic: Provided by LIMRA)
Understanding the already insured
According to Scanlon, senior research director at LIMRA, there’s much to celebrate in the life insurance industry. His research indicates that more than 87 million American households own life insurance, up five million since 2010.
“The coverage gap is larger among households that own life insurance ($7 trillion), than among households that don’t own life insurance ($5 trillion),” he says.
Scanlon adds that approximately 9 million households own only group life insurance.
“Since this segment already believes in the value proposition of life insurance but need supplemental coverage,” he says, “it makes them an important target market.”
For Amis, another huge opportunity is with the children and grandchildren of his retired clients. By building the relationship with insured clients, he’s often able to meet with and gain the trust and business of their families.
“In our practice, we focus on seniors, but we have been working more and more with their extended families and gaining new business there,” Amis says.
Embracing technology and the development of new technology will go a long way toward bridging the uninsured and underinsured gap. (Photo: iStock)
Mobile device initiatives
According to LIMRA data, insurance companies have experienced tremendous growth in consumer-facing technology over the past five years.
Three main factors are pushing life insurers to adopt mobile capabilities:
- Keeping pace with competitors;
- Keeping pace with consumer demand; and
- Providing better service to policy owners.
Mary Art is the director of distribution and technology research at LIMRA. “More companies are making it possible to access their websites, whether they’re using a desktop, a smartphone or some other device,” she says.
Additional technological advancements are ramping up. Plus, demand is helping drive that new technology as consumers want the ability to access their information whenever and wherever they happen to be. They are not alone in wanting their information to go where they go.
“Financial professionals in particular want to be able to see a variety of features while on the go or when they are with clients,” says Art. “If they are meeting with a client, for example, and they forget something or the client asks a question, they want to be able to look that information up using whatever device they have with them.”
Americans born between the early 1980s and the late 1990s currently compose the country’s largest generation. (Photo: iStock)
The millennial factor
At 83.1 million and counting, today’s millennials outnumber baby boomers (75.4 million), which makes them the nation’s largest generation. By sheer volume alone, they should be a major focal point for life insurance sales.
Further good news: Millennials aren’t averse to life insurance. Overall, 70 percent of millennials own some life insurance, that’s a 10 percent increase from 2010. Also, 65 percent of millennial households say they are likely to buy life insurance within the next 12 months. That’s a 29 percent jump from 2010.
It follows that mobile device initiatives are being built out with millennials in mind as they tend to be tech savvy.
But does that mean today’s young people only want to communicate via their mobile devices? Not exactly.
“Mobile devices are not a game changer for getting millennials to buy life insurance,” says Amis, himself a millennial at age 27. “Though (millennials) are known for being connected to our devices, it’s not like we’re using them to constantly check and compare terms and policies.”
He does see one area where mobile devices can make a breakthrough.
“Millennials like to interact via their devices. One big game changer would be to develop more financial and insurance apps that have a chat function. That is a huge way that millennials communicate and can allow them some ownership in the process by having them proactively seeking out answers about their coverage,” Amis says.
Being adept at text messaging is another bridge to developing strong relationships with millennials.
“Financial professionals working with younger clients may find that they want to text to set up or verify a meeting,” says LIMRA’s Mary Art. “In addition, younger consumers may be more willing to have their advisor show them policy information on a smaller screen.”
There remains a gender gap when it comes to women and life insurance. (Photo: iStock)
Hear them roar
Only 56 percent of women have life insurance coverage, a one percent drop from 2010, and well below men’s ownership rate of 62 percent. That gap in ownership has the potential to hurt families financially, according to LIMRA’s James Scanlon.
“In today’s economy, more American families rely on women’s income and resources to be financially secure” he says. “According to Pew Research, 60 percent of today’s households with children under 18 are dual-income compared to just 25 percent in 1960. The fact that fewer women have any coverage at all and often times are well under-insured leaves many American families at risk if they should die prematurely.”
Scanlon adds that one way for financial professionals to see this as an opportunity is by examining how they are communicating with women, and making adjustments where necessary.
“Effectively connecting with women and men require different approaches,” he says. “While both sexes are positively influenced by the trust they have in their financial professional, our research finds that women tend to be more deliberate than men when making the decision to buy life insurance.”
Women are inclined to put more weight on an advisor’s ‘soft skills’ than men, he says.
“A financial professional who takes the time to listen, educate and explain products and how they fit into a buyer’s overall financial strategy,” Scanlon concludes, “will likely be more successful selling to women.”