Last year, staggering numbers revealed a massive life insurance sales gap. In a new report, called “The Elusive Life Insurance Purchaser,” Aite Group attempts to demystify the life industry’s enigmatic consumers.
To do this, Aite conducted an online survey of 1,024 U.S. consumers.
On par with prior reports, they found that 58 percent of those surveyed possessed some type of life insurance, with 34 percent having individual, 19 percent having group and 16 percent having supplemental. Thirty-seven percent reported having no coverage at all, and five percent were unsure. As was expected, Aite found that with age and affluence, the number of consumers possessing life insurance generally increased. However, this leaves persons of “prime working age” at a generally low level of coverage, the report notes. With ages broken into five-year segments, the only two segments to report a rate of ownership at or above 50 percent were 65 to 69 year-olds (50 percent) and 75 and above (62 percent).
In spite of these numbers, the report remained optimistic about the age breakdown: “Individual ownership rates this low among the working age population surely signal a number of opportunities for the U.S. life insurance industry. There are a couple less obvious corollaries,” the report goes on to say. “As consumers continue to deleverage in the aftermath of the credit crisis and its associated recession, it is anticipated that they will stay in the workforce longer to repair dents in their 401(k) balances. At the same time, as the expense of providing health care continues to grow for employers, it will continue to crowd out group life insurance provided as a benefit. This should open the door ever wider for effective worksite marketing of supplemental life policies.”
Such a shift would certainly assist the industry in remedying one of its greatest struggles: outreach.
According to Aite’s report, only 31 percent of respondents had ever met with a life insurance salesperson, which includes agents, brokers, bank reps, etc. This means a vast majority have never met with a life salesperson, which includes 52 percent of respondents that have never experienced not only in-person contact with a salesperson, but also lack online contact or phone conversations with anybody selling life insurance. The report dubs this group the “Great Untouched Masses,” 50 percent of which do not own any life insurance. While this leaves a great quantity of consumers untapped by salespeople, Aite believes that the similarly considerable number of direct purchasers should reassure those insurers worried about channel conflicts.
Interestingly, of those who have purchased life insurance without directly contacting a salesperson, the majority are senior citizens and affluent: 39 percent reported a household income of $150,000 or more and 24 percent reported $100,000 to $149,999.
Low producer penetration, however, remains consistent across all incomes and ages.
The report attempts to delve into what is turning consumers away from the shopping experience, finding that 27 percent of consumers who reported shopping for insurance never reached the end of the process, i.e. they were never placed and never made a purchase. While this may point to the long, arduous process involved, the report noted encouragement in the fact that many that fell into this category already possessed at least one form of life insurance. Those without life insurance who dropped out of the sales process most likely thought the product too expensive (70 percent), while 14 percent found the process too complicated.
The report suggests that technology is simplifying the process, as the report noted that when producers are being met with, technology is increasingly becoming a factor. Laptops and tablets are often present, and 10 percent of consumers who met with producers in the last year reviewed proposals using tablets.
Also indicative of the increasing role technology will play in life insurance, 18- to 49-year-olds were found likely to go directly to the website of a specific insurer when shopping, showing brand-awareness and a preference to engage the process online.
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