Over the last few years, life insurers have been caught in a bit of a no man's land between marketing to older clients on whom they have long relied to keep the industry strong, and also trying to appeal to younger Americans who may not yet consider this type of coverage to be vital to their ongoing financial success. But some things may change in this regard in the next year or two, due to a number of factors.
For one thing, the group of baby boomers that will pass their retirement age is expected to exceed 4.5 million this year alone, according to the latest annual Life-Annuity Consumer Markets Annual from Conning. That, in turn, could lead to more sales in the life and annuities industry as a whole in the very near future.
Mary Pat Campbell, the vice president of insurance research at Conning, noted that this comes at a time when there are still major gaps in coverage between what most experts would agree people ought to have to properly safeguard themselves and their loved ones financially, and the amount of protection they actually carry, the report said. That may indicate an issue in dealing with the baby boomer generation as a whole, because the ways in which life insurers have dealt with them more or less since the economic downturn hit might not be as effective as those methods would have been prior to the downturn.
What could be done differently?
The fact is that most baby boomers were hit with major upheaval at a time when they should have been finalizing their preparations for retirement, the report said. The financial difficulties that arrived on the doorsteps of millions when the economic downturn hit likely put many people behind where they wanted to be at that point in their lives. A lot of people aged 55 or older lost their jobs, and others had to decrease or even suspend their contributions to things like retirement accounts just to make ends meet.
With this in mind, life insurers will potentially need to find new ways to help these people deal with their financial needs, the report said. Steve Webersen, the head of insurance research at Conning, noted that this provides a solid window in which policy issuers can operate for the benefit of those consumers specifically, as over the next five to 10 years, the number of baby boomers who need income replacement tools like life insurance and annuities will increase sharply, both as they age and as the economy improves once again.
Connecting better with consumers
It's important to keep in mind that one of the big hurdles many life insurers have faced in recent years has also come due to misconceptions about this kind of coverage. Most people tend to dramatically overestimate the cost of life insurance, and therefore a little education effort on the part of policy providers could go a long way toward boosting sales.