Closing the life insurance coverage gap by investing in education

Life insurance is a key part of financial literacy, yet it’s often overlooked, leaving millions of families in a vulnerable position. According to LIMRA’s 2024 Insurance Barometer Study, 102 million Americans are uninsured or underinsured, highlighting just how imperative it is to create a deeper understanding of how life insurance can protect families’ futures.

Legal & General America’s “Brighter futures on the horizon” report found that encouraging clients to have awkward money conversations with loved ones, emphasizing advisors as a great resource, and creating new partnerships with financial institutions and banks, can help more families get the coverage they need. The survey was conducted online by The Harris Poll on behalf of Legal & General America in February 2024 of 2,000 U.S. adults and identified three key imperatives that can help close the gap: education, value and innovation.

Embracing awkward conversations about life insurance

There’s never a right time to have a tough conversation, but that doesn’t make those conversations any less vital. Americans tend to shy away from open conversations about their finances because talking about money can feel uncomfortable. According to the Legal & General survey, 44% would rather discuss their dating history than their finances with family. The extra layer of awkwardness with life insurance comes from not only talking about finances, but talking about death on top of it.

Introducing financial education in schools early on can motivate students to start money conversations with family members from a young age. In fact, more than half of Americans between 18 and 34 years old spoke openly with their families about finances while growing up, in stark contrast to only 31% of those 65 years and older. These numbers highlight a positive shift – despite financial literacy historically being overlooked in schools, younger generations are making these discussions more common and accessible.

Using advisors as a resource

Enhancing one’s financial literacy in adulthood can be daunting. The 27% of uninsured or underinsured may not even know where to start to get the needed education. Without a personal connection to someone who works in the insurance industry or is well versed in the concept, finding reliable information may seem challenging. But that doesn’t mean people must navigate this subject alone. Financial advisors are a fantastic resource to ask questions and help understand the importance of life insurance in financial planning.

Advisors can be useful guides for those starting a life insurance policy application. They provide support along the way to make sure applicants not only understand the value of insurance but are confident from start to finish. While 58% of Americans prefer to work on their finances alone, advisors can act as that backstop to vet all options and validate choices. Technology further enhances their role by helping prevent drop-offs during the application process.

Creating new partnerships

Even beyond the increased focus on financial literacy from advisors and agents, the industry should look more broadly for partners in education, including financial institutions and banks. There is increasing recognition of the potential positive impacts of these institutions playing a more prominent role in education and building momentum. This has caught the eye of legislators as well; a fiduciary rule is currently being explored in Congress to mandate these broader conversations.

Closing the life insurance coverage gap starts with education. Embracing new ways to inform consumers ensures more families will be equipped to protect their loved ones’ futures. Whether through tough discussions with family, guidance from advisors or partnerships beyond the insurance industry, the goal is to make financial literacy accessible to all Americans.

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Mark Holweger is president and CEO of Legal & General America’s insurance division, which includes operating companies Banner Life Insurance Co. and William Penn Life Insurance Co. of New York. Contact him at [email protected].