"Consumers now believe that life insurance is irrelevant. The life insurance market must be saturated. Nobody wants to buy from an agent or adviser anymore. Insurance is only for the rich." Are these statements true? Rather than get into an emotional argument, let research show the results.
While this research by LIMRA was done in the US, there are many insights which are universal, with these myths also prevalent in Asia.
According to LIMRA U.S. life insurance ownership study, life insurance ownership in the US is holding steady at 70% of the population or 87 million consumers. But 60 million American households need more life insurance. Among the uninsured households 40% say they would immediately have financial trouble if a primary wage earner died today; and 30% would have trouble keeping up with basic living expenses after several months.
LIMRA Research Director Alison Salka and Chief Membership Officer Jim Kerley addressed the five myths about life insurance.
Myth 1: The life insurance market is saturated
In fact, there's a US$12 trillion opportunity in the market. Almost half of US households have a life insurance gap and the average gap is about $200,000. So pretty much everybody needs more life insurance.
Myth 2: Consumers think life insurance is irrelevant
LIMRA’s data shows 85% of people agree that life insurance is important. Consumers are starting to recognise the life insurance gap and the number of people who are planning to buy insurance has gone up. Those with an intent to buy has gone from 20 percentage points to 45% of households who said they're likely to buy insurance in the next year. The interest in life insurance is growing so it is certainly relevant.
Myth 3: People who don't own insurance – don’t want to
LIMRA’s research shows that there are 19 million stuck insurance shoppers – people who want and start to buy insurance but they're stuck and there are three primary reasons:
- they don't know what to buy;
- they don't know how much to buy; and
- they don't actually know how much it cost.
So peopled do want to buy, the industry needs to reach out harder, to educate consumers and make the buying journey a painless one.
Myth 4: Life insurance is for the rich
Life insurance is not just for the rich. LIMRA has been studying the question on cost for many years. Consumers are always thinking about the costs and LIMRA’s research found that people tend to overestimate the cost of life insurance. This means that cost should actually be less of a barrier than it is.
So if you put these facts together that there are 19 million stuck shoppers, that consumers really have three fundamental questions to answer and that millions of people are actually going online to get information before they purchase, what it says to advisers is that education is critically important and that today's consumers when considering life insurance really want advisers to be coaches and to be teachers and to help them understand the information that they have.
Myth 5: Consumers don’t want to work with agents when buying insurance
Every day we see research that shows the value that an agent or an advisor can bring because the majority of consumers across all generations say they prefer to buy face to face. What they're looking for is a trusted adviser and they want agents to make recommendations.
LIMRA’s research shows that consumers buy substantially more insurance when they get advice and they are more confident, which is something that do not always get measured.
It is critically important that agents understand that education is the key to successful selling today. One of the things that is important for the insurance industry to talk about is really the role that we play in society today. The industry secures families and millions of Americans every day. It pays out almost $1.5 billion in life insurance annuity, long-term care and disability payments every single day. It's dramatically helping a lot of people. For those of you meeting with clients every single day making sure that they have the coverage needed, thank you for the work you do.
This is part of the LIMRA Unplugged video podcast series.
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