Study: How does flexibility impact life insurance purchase decisions?

In the world of life insurance, guarantees have long reigned as the gold standard—products with lifetime guarantees, no-lapse provisions, and steady premiums have been the go-to for risk-averse consumers. But new research suggests that the tide may be shifting to give more weight to flexibility —if, that is, financial professionals are willing to take the time to explain alternatives.

A 2024 study commissioned by John Hancock and conducted by Zeldis Research Associates explored consumer preferences around permanent life insurance guarantees. The findings are clear: With the right education and framing, most consumers are not only open to—but actually prefer—policies with lighter guarantees and greater flexibility.

Let that sink in. When stripped of the usual industry jargon and educated on the actual mechanics of cost and flexibility, nine out of ten consumers surveyed said they favored lower-cost, shorter-guarantee policies. It is a counterintuitive insight in a product category that has built its reputation on permanence and predictability.

Flexibility may be more important

The research, which included nearly 400 survey respondents and more than two dozen in-depth interviews and focus groups, was designed to test a hypothesis that has been gaining quiet traction among insurers: that value and flexibility, when properly understood, may ultimately be more important to today’s life insurance buyer than a rock-solid guarantee to age 121.
And the hypothesis held.

Hector Martinez, Hancock’s head of insurance, said the study’s findings were surprising and not surprising at the same time.

“They were not surprising in the sense that we know from experience that customers, when given the choice, prefer a lower-cost option with life-expectancy guarantees to a higher price option with an age 121 or “lifetime” guarantee,” Martinez said, noting that Hancock at one time was the top seller of “no-lapse guarantee Universal Life. In 2011, however, Hancock changed its product design to a lower-cost UL option and in a few years, it became the top UL in the industry.

“On the other hand, it did surprise us that customers were so one-sided in their preferences,” he said. “It’s a great reminder not just for us, but especially for producers who might have an immediate preference for the word ‘guarantee.’”

At the heart of this shift is consumer sensitivity to cost. It is no surprise that cost is a primary driver in life insurance decisions—especially with high-net-worth consumers who are savvy about long-term investments and financial planning. But what the study revealed is just how much power that cost lever holds.

'Why pay more for the same thing?'

When presented with a hypothetical product that offered the same death benefit at a 15% lower cost, many consumers quickly latched onto the value. As one participant put it: “Why pay more for the same thing?” Another added, “Saving 15% a year for 30-40 years is a lot of money!”
That cumulative savings—spread out over decades—is a powerful hook. And it creates a ripple effect: lower premiums mean fewer lost opportunity costs and more flexibility to invest elsewhere. For financially minded clients, it feels like a smart move. “It really feels like a good value and a smart purchase,” one consumer said.

Of course, the catch is that these lower-cost products come with lighter guarantees. In the study, the “lighter” product was defined as one that included guaranteed coverage only to age 90, after which premiums could potentially change.

That prospect raised some eyebrows—initially. But with visual aids, explanation of market scenarios, and a clear breakdown of what drives premium changes, most participants became comfortable with the idea. In fact, 89% of them said they would choose the more flexible product once they understood how it worked.

Framing the conversation around flexibility

“The top take away is that there are ways to frame the conversation successfully that really resonate with customers and help them stay informed,” Martinez said. “And there are some ways that aren’t as helpful. Producers who know the difference will be the most successful in helping customers.”

That shift underscores a critical takeaway for financial professionals: the explanation matters. Most consumers are not inherently wary of change—they are wary of uncertainty. But once they can see how a policy behaves across different scenarios (like market underperformance or extended longevity), and once they understand that premium changes are often unlikely or manageable, the fear dissipates.

In fact, many consumers in the study did not believe they would live beyond the non-guaranteed period at all—further reducing their concern over a potential premium hike in their 90s.
Beyond cost, flexibility emerged as another key value driver. Consumers appreciated the ability to make adjustments over time—whether that meant changing premium timing, increasing payments, or adapting to life events.

More important, flexibility gave consumers a sense of control, something that is often lacking in traditional, one-size-fits-all life insurance products. In their words, flexibility made them feel “not locked in,” “more secure,” and better equipped to handle life’s unpredictability.

Options sought by consumers

Several participants also expressed frustration that financial professionals often present only one choice—the most secure, most guaranteed, and, unsurprisingly, most expensive one. That approach, while well-intentioned, may not always be aligned with what the consumer wants. “I’d be pretty upset if I was only shown one option,” one participant said. “We pay this man to tell us what all of the options are.”

So, what’s the upshot for financial professionals?

In a time when product differentiation is hard to come by, and when clients are increasingly wary of one-size-fits-all solutions, this study offers a valuable lesson: Flexibility sells—but only when it is explained.

And if you are in the business of selling permanent life insurance, you might just find that the lighter path leads to heavier sales.

“We’ve updated our approach to sales conversations and some of our marketing language,” Martinez said. “To give just one example: customers are much less interested in the potential percentage savings on an annual basis than in the cumulative savings they can realize over time. So, we are making sure to be extra clear in our messaging.”

 

© Entire contents copyright 2025 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.