An increase in customers’ awareness of their own mortality, combined with the ability to place assets in a tax-advantaged plan, is helping drive increased interest in — and customer satisfaction with — life insurance plans, according to the J.D. Power 2021 U.S. Individual Life Insurance Study.
“Life insurance ownership has been declining for the past 30 years and overall customer satisfaction with life insurance has historically deteriorated consistently from the moment it is purchased,” Robert Lajdziak, senior consultant of insurance intelligence at J.D. Power, said in a statement.
But all that is starting to change, Lajdyiak said.
“With the spotlight on the industry now shining brighter than ever, insurers that differentiate with simple touch points, close alignment with customer goals and clear communications are well-suited to seize the moment to build significant lifetime value,” he said.
The 2021 study was based on a survey fielded in June and July among 4,625 individual life insurance customers.
The survey found that the overall customer satisfaction score for life insurance providers improved by 13 points to 776 (on a 1,000-point scale) from 2020 as customer interest in life insurance rises.
Although most customers buy life insurance to cover final expenses and leave money to beneficiaries, 18% of study participants said they are using the policies to protect retirement income and 9% are using them for tax planning purposes.
J.D. Power said five key characteristics of the agent/advisor-customer relationship drive overall satisfaction and advocacy:
- Help customers understand the policy.
- Understand customer goals.
- Work as a team.
- Make recommendations in the customer’s best interest.
- Take actions with a long-term relationship in mind.
When those criteria are met, satisfaction and brand advocacy soar. Only 34% of agents/advisors, however, meet all those criteria today.
State Farm ranks highest among individual life insurance providers with a score of 822. Nationwide, with a score of 813, ranks second and Northwestern Mutual ranks third with a score of 807.
According to the study, insurer websites are the most frequently used communication channel for life insurance customers. Forty percent now use their insurer’s website to research policy information, access their account and make payments.
Overall customer satisfaction with life insurer websites climbed 24 points this year to 844.
J.D. Power found that overall customer satisfaction increased 50 points when customers recall receiving just one communication from their life insurance provider in the past 12 months, but only 53% of respondents said they had received such communications.
Farther along the proactive communication continuum, among respondents who said they had received an email communication, customer satisfaction increased 81 points. Even better, among those who received communications tailored to meet their specific needs, satisfaction skyrocketed 172 points.