During and even after the recession, the life insurance industry took a bit of a hit as many consumers shifted their financial focus to the absolute necessities. However, in the past few years, life insurance has started to make a major comeback, and it's clear why. Polls routinely show that even if people don't have life insurance, they understand the intrinsic value these policies provide. The latest data also suggests that interest in buying this kind of coverage continues to rise nationwide.
Interestingly, one of the biggest reasons that consumers say they don't have life insurance has always been the perceived cost of coverage, but that's often because people don't really understand what such a policy would actually cost them each month. Often, they seem to assume their only option is whole life insurance, which can be somewhat expensive. This is, of course, incorrect. Given that people tend to estimate the annual cost of coverage to be as much as several times more expensive than a term policy actually is, often all that's needed to get people onboard is the ability to see all their options.
This is why relatively small group policies offered by employers often prove so popular when they're offered, because people may not have done the research themselves when it comes to figuring out just what a beneficial life policy would actually cost them.
A look at the numbers
But thanks to a new push from employers, widespread misunderstandings of how life insurance works may be starting to change in a profound way, according to the latest U.S. State ESI and EPI Data report from Eastbridge Consulting Group.
From 2014 to 2015, the market share for term life insurance through employers increased to 35 percent from 29 percent a year earlier, while enrollment in universal and whole life dipped to 8 percent from the previous 9 percent, the report said. Much of that is likely due to the fact that more businesses are starting to offer less expensive coverage to employees through work-based group policies, and it's proving to be somewhat popular even though such coverage tends to carry smaller benefits.
"We continue to see growth in the share of all voluntary sales from Employee Benefit Brokers," said Gil Lowerre, president at Eastbridge Consulting. "It is fairly common to see those producers new to voluntary selling products they are most comfortable with based on their experience representing employer-paid coverages. Term life often fits that bill."
Meanwhile, though, when it comes to the share of the market via new sales that life insurance makes up as part of all employee benefits, there was a bit of a step back, the report said. In all, it accounted for 27 percent of all new sales in 2015, down from 29 percent the year before. However, it continues to enjoy an overall premium share of more than double the next-most popular benefit option. Bonne Brazzell, Eastbridge's vice president, notes that this shows how persistently popular life insurance is in comparison with other types of coverage, though that could change as time goes on and new industry trends emerge.
But if the biggest issue when it comes to getting people signed up for life insurance is the perceived lack of access to such coverage and misconceptions about what it actually costs, that shows what kind of outreach work life insurers themselves have to do. The more people know about this kind of coverage, the more likely they will be to see it as something they can reasonably afford and benefit from.