Can life insurers do more to reach the LGBT community?

Over the past few years, the life insurance industry as a whole has made a solid comeback thanks to consumers recognizing the importance of having such coverage, and also once again having the financial wherewithal to pay for it. However, there are some pockets of Americans who tend not to have such coverage – younger people in particular – and while this happens for a variety of reasons, the fact is that it leaves those consumers somewhat vulnerable.

This is also a potentially worrisome for those in the LGBT community because data suggests that they tend to lag behind the rest of the U.S. in terms of buying life insurance. One major insurer found that this was true across a wide variety of popular financial products – savings accounts, 401(k)s and IRAs, and so on. But the life insurance gap was somewhat noteworthy because only 42 percent of LGBT respondents said they had life insurance, a number which falls well short of the general population's 54 percent. On the other hand, 19 percent said they had disability insurance, compared with 17 percent of all other respondents.

The LGBT community may struggle to get life insurance for a number of reasons.

Financial issues facing the community
It should come as little surprise that, given other issues in terms of the kind of money people earn, there is a large disparity between what heterosexual men make versus the rest of the population, the report said. For example, while heterosexual men in the survey make more than $83,000 annually on average, gay men earn less than $57,000 on average, and that number is far more significant than lesbian women (a little more than $45,000). These issues can make it harder to justify purchasing a number of financial products, life insurance included.

Indeed, a far larger portion of the LGBT population says it struggles to make ends meet, or worse when compared to all Americans, the report said. In all, 1 in 3 say they fall into the former category, and 8 percent say they simply can't keep up with their expenses. That compares quite negatively to fewer than 1 in 4 of all Americans who say they struggle, and 4 percent who say they can't keep up.

Take a lesson from overseas
When it comes to reaching out to the LGBT community for life insurance advice, it might be wise to examine how much success insurers in England have had, according to a report from the Actuary. There, the average size of a policy taken out by LGBT consumers came to more than £185,000 – nearly a quarter of a million U.S. dollars – despite the fact that some potential buyers still struggled to get coverage. Much like how the U.S. life insurance industry deals with an HIV-positive applicant, people who received such a diagnosis continue to have difficulties getting coverage.

The more life insurers can do to make sure they are connecting with a larger number of people – while still keeping their risk as reasonable as possible – the better off both they and their clients are likely to be. Continually assessing positions on how people of all backgrounds are able to get coverage should go a long way toward connecting with the largest possible base of consumers.