LIMRA research shows significant drop in past decade, but new findings suggest path forward
Ownership of life insurance might have declined in the U.S. over the past decade, but shifts in consumer demand and preferences could create an opportunity for the industry to turn that trend around.
In its 2020 Insurance Barometer Study conducted with Life Happens, LIMRA found that U.S. life insurance ownership declined by 9 percentage points to just 54%. According to researchers, that stemmed from a decrease in employer-paid group life insurance benefits, which went from 32% in 2011 to 27% in 2020.
However, the study also found that plans to purchase life insurance are at an all-time high as 36% of Americans surveyed said they intend to do so in the next 12 months. Alison Salka, Ph.D., senior vice president and head of LIMRA research, said that the COVID-19 pandemic may boost purchase intent by increasing the perceived need for life insurance.
Increasing acceptance of social media was another prominent theme in the poll. Nearly half of consumers polled said they have turned to social media – most notably Facebook and YouTube – for information on financial topics, companies, or advisors. The use of both Facebook and Youtube for financial topics has doubled just in the period from 2019 to 2020, and one in four consumers said they use social media to look for advisors.
Among those using social media sites for finance-related topics, 62% read other people’s revies and comments on their agents, and 59% seek information on products and services.
“Leveraging social media is now indispensable for financial professionals to market themselves and engage with consumers—especially with younger generations and during this time where financial professionals aren’t able to meet face-to-face with clients,” said Faisa Stafford, LUTCF, president and CEO of Life Happens.
Changing preferences in the way consumers buy life insurance may also help reverse the long-term decline in ownership. While 64% of consumers surveyed in 2011 said they preferred to buy in person, only 41% of those polled in 2020 felt the same. Over the same period, the preference for online purchasing rose from 17% to 29%.
“Over the past several years, life insurers have expanded their simplified and automated underwriting practices to make it easier and more cost effective to buy life insurance online,” Salka said, adding that LIMRA saw a rise in online applications amid social distancing in recent months.
Half of Americans said they were more likely to purchase life insurance if it involved simplified underwriting. Among other reasons, the top benefits included the fact that it is fast and easy (66%); is unbiased and objective; provides transparent explanations of risks and pricing (58%).
