LGBTQ+ and life insurance: Is it a matter of trust?

By Steve Wood

As a consumer markets researcher, I am constantly seeking insights into different demographics. That’s the easy part. The hard part is trying to distill those findings into digestible chunks without diminishing any of the unique needs of the market in question.

According to a recent Gallup Poll, an increasing number of younger adults identify themselves as part of the LGBTQ+ community. The 2024 Insurance Barometer Study, conducted jointly between LIMRA and Life Happens, surveyed 454 LGBTQ+ Americans between the ages of 18 and 75 to gain insights into the attitudes and behaviors regarding various aspects of life insurance shopping, knowledge and products.

To learn how best to reach and be successful with this growing market, we can look at some key differences around financial concerns, retirement preparedness and perceptions of key interactions throughout the life insurance purchase process.

As the LGBTQ+ survey sample mirrors the Gallup Poll’s findings, it is important to compare findings to younger adults. When compared to all Americans, LGBTQ+ express significantly greater financial concerns, particularly retirement and emergency funding.

It is compelling to note that LGBTQ+ individuals tend to show greater concern than Generation Z and millennials as a whole. Having enough money for a comfortable retirement has been the top concern of all demographics for all 14 years of the Barometer Study, but four of the other five specified in the figure are generally all related to “emergency funding.”

Forty percent of LGBTQ+ individuals report owning life insurance, which lags the combined Gen Z and millennial group, at 46%, which is five points below all Americans (51%). The data do not tell us why these heightened concerns exist for the LGBTQ+ cohort. However, we can perhaps make some inferences.

The data cannot be explained solely by household income levels, as there are no marked differences between populations. There are likely some underlying socioeconomic issues at play here. Universal acceptance of LGBTQ+ community members has not been achieved across the country, and that may be fostering the creation of personal networks of safety nets. Fewer LGBTQ+ adults are married and even fewer have children. This affects life insurance ownership rates as well as financial security. More LGBTQ+ adults are flying solo financially as a result and therefore have elevated levels of financial concern.

How can these concerns be addressed?

“Purchase life insurance! Buy an annuity!” If only it were that easy for the industry.

Reality does not work so simply. Purchasing many types of life insurance products can be a very confusing — and personal — experience. Purchasing life insurance often requires fluid draws and several face-to-face conversations. Discussing one’s mortality with a financial professional can be a difficult step along the purchase journey. We know that many of these professional relationships require a higher level of trust than most other transactions.

Is trust a factor when it comes to the lower levels of life insurance ownership and higher levels of financial concern in this cohort?

The Barometer Study data suggests that it at least plays a role. Regionality, incomes, age and race/ethnicity were ruled out as contributing factors. LGBTQ+ adults do not feel discriminated against with regard to applications and underwriting, as sexual orientation is not part of those processes.

But the LGBTQ+ community is twice as likely to mistrust both insurance companies and financial professionals as compared to the general population. That mistrust acts as a barrier preventing those meaningful and detailed conversations that must occur when purchasing a more comprehensive life insurance policy.

Is this mistrust warranted? Is the perceived bias unfair? Conscious? Unconscious? Regardless, about one of every six LGBTQ+ adults reports that they do not trust insurance companies and/or the people who work for them.

Discussions around beneficiaries and family dynamics with all potential clients must be conducted in a fair, honest and equitable way. Customers need outreach and education for us to best serve them — but do we also need more outreach and education regarding LGBTQ+ issues and concerns? The data says yes.