There’s good news and bad news for agents in LIMRA’s annual study of customer behaviors toward life insurance.
The good news is very good, reported James Scanlon, senior research director for LIMRA.
The number of households covered by life insurance increased by 5,000 since 2010, the new U.S. Life Insurance Ownership study found.
“That’s an important finding,” Scanlon said. “Life insurance ownership volume actually had dropped between 2004 and 2010. It came back strong. … That’s a very positive story.”
The 2008 economic downturn is blamed for declining life insurance ownership levels and created a concern those clients might be lost forever.
Instead, the study shows that Americans have fewer financial concerns these days. Seventy percent of households own life insurance, the same percentage as 2010.
“It indicates a strong recovery from the financial crisis and it points to continued growth in the future,” Scanlon said.
The bad news comes via LIMRA’s Insurance Barometer Study. It shows strong and growing interest in innovations like simplified underwriting, Internet insurance sales and peer-to-peer coverage.
These are all things that limit, or cut out altogether, the role of the independent insurance agent.
LIMRA asked about simplified underwriting for the first time in this survey and 70 percent of respondents expressed interest, said Matt Derrick, executive vice president of programs and marketing for Life Happens.
The trend data doesn’t mean there’s no role for insurance agents, but they may need to adapt their methods to stay in the game. Some data results reinforced the need and opportunity for agents, Derrick said.
“Almost half of millennials said they haven’t been approached by an insurance agent and that’s why they don’t have insurance,” he explained. “If they can figure out a way to reach those people or a way to get in front of them, whether through traditional distribution or online or a combination of those, the field should be very ripe, so to speak.”
The study identifies why people buy and don’t buy life insurance, Scanlon said, which can be the most valuable information for agents. The Life Insurance Ownership survey revealed three answers on why respondents don’t buy: life insurance is too expensive, they have other financial priorities, and they have all the life insurance they need.
The study data reveals the flawed perceptions about life insurance.
“People think on average that life insurance is twice as expensive than it actually is,” Scanlon said. “So you know that’s a message that the industry can do a better job broadcasting because life insurance is actually more affordable than people think it is.”
Forty-eight percent of households have a life insurance coverage gap, the data revealed. So many of those life insurance owners do not have the coverage they need, Scanlon said.
If people become more educated on the value of life insurance and the appropriate coverage levels, that should take care of the third perception, Scanlon said.
“It becomes easier to prioritize,” he said.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at email@example.com.
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