One of the biggest issues in the life insurance sector - cited time and again by insiders - is that many individuals do not have the life insurance coverage they need. There may be many reasons for this, including not understanding what coverage costs or simply not realizing how important it is for financial planning.
Some question whether carriers need to be more proactive about outreach not only when it comes to why life insurance is important, but which people can benefit most from having it.
For instance, nearly two-thirds of parents in a recent Policygenius survey said they do not carry individual life insurance, in large part because they may have small-dollar-amount group coverage through work. Today, about 1 in every 3 people who have any kind of life insurance coverage only do so through an employer, and it's quite likely that many parents fall into that group.
Life insurers would be wise to target these individuals, highlighting that the survey found more than 70% of parents with individual life insurance felt financially prepared to have kids, versus only a little more than half who felt the same way without such coverage. It's also important to explain to consumers that just because you have group coverage, doesn't mean you're adequately covered - typically, this kind of policy would only replace a year or two worth of salary, while experts say parents should be able to replace at least a decade's worth of income.
Impressing the importance
A separate poll conducted by Life Happens and Edward Jones found only a little more than 2 in 5 peopleregardless of parenting status have individual coverage, and nearly a third of those surveyed said they felt life insurance was of little concern - or not a priority at all - when starting a family. However, many respondents were not aware life insurance benefits could be used to cover final expenses and estate considerations.
Interestingly, this poll also found that 43% of respondents were most interested in buying life insurance directly from the insurance company, ahead of brokers (33%) and financial advisors (21%). Millennials - those most likely to start a family in the next several years - are more likely to rely on financial advisors to buy coverage when compared to Gen Xers and baby boomers.
A deeper understanding
Today, with more than half of Americans carrying at least some life insurance protection, insurers have a foot in the door for broadening people's perceptions about coverage. A LendEDU survey found 83% of people who have coverage think it's worth the money, however, about 1 out of 3 respondents said they didn't fully understand the ins and outs of their policies. Furthermore, 1 in 5 of the survey participants who had coverage said they weren't sure what kind it was.
By and large, those who did have insurance said they got it for something related to insulating their families from financial problems in the event of an untimely death: 35% planned to use it primarily as income replacement, 30% say the benefit would cover final expenses, 6% said they would use it to pay off debt, and 13% stated they just knew it was important to have.
Among the roughly 44% of people who don't have life insurance today, 53% said they plan to get life insurance, 29% stated they were unsure and only 18% intended on not purchasing life insurance in the future.
The most common reason people didn't have life insurance - cited by 44% of respondents - was they believed they couldn't afford it. Another 12% thought it wasn't worth the money, and 6% were unsure of how the whole process worked.
The lay of the land
With all of the above in mind, the question for many in the industry is whether they can make themselves more responsive to consumer questions or concerns related to life insurance. There seems to be some good news on this front: only about 1 in 5 life insurance executives responding to a PricewaterhouseCoopers poll were "extremely concerned" about the impact of changes in consumer behavior to the growth of their organization, down from nearly 1 in 3 a year earlier.
While these numbers are still higher than many companies would like, it seems as though the industry as a whole is making headway when it comes to better serving policyholders - both current and future. Continually doing more as it relates to targeted outreach could pave the way for millennials in particular to better engage with life insurance going forward.