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Life Health > Running Your Business > Marketing and Lead Generation

Life Insurance Has an Inclusivity Problem

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What You Need to Know

  • June is Pride Month.
  • For LGBTQ+ people surveyed by Bestow, saving for retirement is the top problem.
  • In the life insurance market, one area of concern is underwriting rules related to mental health.

Pride Month provides us all — as individuals and business leaders — an opportunity to reflect on how we can better serve the LGBTQ+ community.

This is a subject that my family and I are personally passionate about.

My wife is the founder and executive director of an organization that works directly with LGBTQ+ individuals, and we’ve seen firsthand the challenges this community faces.

For Pride Month, my company Bestow, a life insurance technology provider, conducted original research to understand the specific financial concerns of the LGBTQ+ community and use that to inform how to build better products and experiences to serve this audience. Aside from it being the right thing to do, as an industry, we should care.

The LGBTQ+ community experiences most of the same milestones that create a need for coverage, and they actively buy life insurance.

  • 64% of LGBTQ+ individuals with financial dependents had life insurance.
  • 42% plan to get life insurance when they buy a home, find a partner, or start a family.
  • Younger LGBTQ+ homeowners were more likely than older LGBTQ+ homeowners to have life insurance.
  • About 80% of LGBTQ+ homeowners under 30 had life insurance.

Here are three things we learned at Bestow from this data that we believe can be leveraged by the industry to better reach and serve the LGBTQ+ community — ultimately increasing their financial resilience and security.

More Inclusive Underwriting

Modern underwriting approaches and distribution methods, often spearheaded by insurtech companies, unlock unique, data-driven insights that enable the industry to understand who they’re serving well — and where they fall short.

The industry can use these insights to adopt a more personalized, progressive approach to product design, underwriting, and distribution to reach specific populations with coverage options and pricing that suits their unique needs.

For the LGBTQ+ community, historical rules and underwriting approaches around mental health could make coverage unattainable or unaffordable.

For example, while our survey didn’t ask respondents about treatment for mental health, the cost of health care in general was a primary concern for nearly 70% of respondents.

A study published in the National Library of Medicine found that LGBTQ+ people used mental health services at 2.5 times higher rates than heterosexual or cisgender individuals.

Additionally, studies have found that they are two and a half times more likely to experience depression, anxiety, and substance abuse — items that are all considered in the underwriting process for life insurance.

Since many in the LGBTQ+ community struggle with mental health concerns, we must find better ways to understand the situation and evaluate the risk holistically.

For example, research shows that having a supportive community makes a big difference in the mental health of LGBTQ+ individuals.

We should ask follow-up questions in the application process that dig deeper into treatment, recognize consistency in medication and therapy, and ultimately the support system around the applicant.

Elevate and Leverage Living Benefits

A life insurance product is much different from other products that consumers purchase.

As a policyholder, you secure coverage, pay premiums for decades, and hope never to use the product you’ve purchased.

For many term products, you never see a benefit to the coverage, other than the peace of mind that your family has a financial safety net.

As we’ve seen in recent years, there’s a massive opportunity to provide consumers with living benefits to their life insurance policies.

The benefits can not only increase retention, they can also help with brand equity.

Bestow’s research highlighted a few key areas where packaging living benefits with coverage, or at least identifying these use cases when explaining the benefits of cash value accumulation, could be especially valuable among the LGBTQ+ community and making life insurance products more relevant.

Medical Care

Nearly 80% of LGBTQ+ respondents report feeling concerned about medical costs.

In particular, medical costs associated with mental health, preventative medicine, and treatment and medications for chronic illnesses.

There’s a massive opportunity to consider how these medical conditions affect eligibility and access and use that to inform policy design.

We can also consider how these provide a unique opportunity for living benefits, such as no-cost mental health support for policyholders.

Family Planning

Family planning can be a complex and costly process for LGBTQ+ people.

Twenty-five percent of respondents with a partner are financially concerned about the cost of starting a family, including adoption, fertility treatments, IVF, surrogacy, or sperm donation.

The average cost per IVF cycle, including medications for egg donors and surrogates, is approximately $20,000.

To secure an egg donor is, on average, $10,000 – $20,000 in compensation and fees.

The industry can consider family planning services as inherent policy benefits through forward-thinking companies like Maven.

Additionally, life insurance agents can provide personalized education on the benefits of cash value and how it could help cover the costs of starting a family.

Savings and Retirement

Like many Americans, the LGBTQ+ community is concerned about savings and retirement.

The top three financial concerns listed were saving for retirement (42%), building an emergency fund (35%) and saving to buy a home (30%).

Whether it’s strategic partnerships that support overall financial health, designing more products with savings and investment capabilities, or educating on how cash value can supplement retirement, there are many ways to make life insurance more relevant to a holistic financial plan.

Representation Matters

Lack of trust in financial institutions and representation are critical barriers to financial planning for LGBTQ+ individuals.

We found that more than 1/3 (35%) have experienced discrimination or micro-aggressions by a financial services institution based on their sexual orientation or gender identity.

So it’s no surprise that 36% of those surveyed would prefer working with an LGBTQ+ identifying financial advisor.

We also found that only 20% of respondents listed financial advisors as a top 3 choice for financial education — which could be a result of mistrust and a lack of representation.

Prioritizing representation will benefit us in many ways, including building more inclusive products, experiences, and sales practices that ultimately help expand the market we serve.

Working Together to Build More Inclusive Products and Experiences

As someone who has worked in life insurance for nearly 25 years, I know the inclusivity problem isn’t intentional.

However, institutional barriers, the regulatory landscape, and a lack of representation can compound this problem.

As an industry, we must do better.

Encouraging representation, inclusive hiring, and elevating the voices of people from all backgrounds ultimately results in building better, more inclusive products and experiences.

Additionally, we need to challenge underwriting and product design practices and question who they best serve and who they leave out the most.

Further, we need to work alongside regulators to identify and update rules that may prevent product and experience innovation.

The first step is awareness and using data to recognize these trends.

Now it’s on us to act.


Jeremy Bill. (Photo: Bestow)Jeremy Bill is the chief insurance officer at Bestow.

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