Even with the current pandemic that has taken more than 230,000 lives across the U.S., consumers aren’t any more interested in purchasing life insurance than they were in the past, according to the J.D. Power 2020 U.S. Life Insurance Study. The report says a combination of infrequent client communications and a pervasive perception of high cost and transaction complexity have suppressed consumer interest and customer satisfaction with life insurance providers. Among other findings:
- Life insurance customer satisfaction flat year over year: The overall customer satisfaction score for life insurance providers is 763 (on a 1,000-point scale), up just two points from 2019. Annuity customer satisfaction increases to 778, also just two points higher than in 2019.
- Customer interest in life insurance unaffected by pandemic: Even during the height of fear and uncertainty about COVID-19 in March and April of 2020, a majority (70%) of life insurance customers said their perceptions of their life insurance provider were unchanged by current events. Likewise, the number of customers without life insurance who considered purchasing a policy was largely static during the same period, hovering around 40%. The main reasons customers avoid life insurance continue to be the perception of unaffordability and the complexity of the application process.
- Customer satisfaction declines with product tenure: Customers who’ve owned a life insurance policy for less than five years have the highest overall level of satisfaction with their policy (803). Scores fall 27 points among customers with a tenure of six to 10 years; by 45 points among those who’ve been customers for 11 to 20 years; and by 56 points among customers with a tenure of more than 20 years. Annuity customer satisfaction is relatively stable across tenure segments, increasing among higher-tenured customers, but influenced in those later years due to customers beginning to receive payments.
- Policy understanding is key to improvement: Overall levels of satisfaction rise considerably when life insurance customers indicate having a detailed understanding of their policy and benefits. The key driver of this understanding is consistent communication, achieved through a combination of online access, offering to review policy needs and ongoing interaction.
The study is based on responses from 5,469 individual life insurance customers and 3,674 annuity customers. The study measured overall customer satisfaction based on performance in six factors: application and orientation; communications; interaction; price; product offerings; and statements.