The LGBTQ+ market: A rainbow of opportunity

By Timothy Harper

Do you remember where you were when the U.S. Supreme Court handed down the landmark Obergefell v. Hodges decision legalizing same-sex marriage in the U.S.? It was June 26, 2015; I was 20 years old and at home with my mother when we learned the U.S. was validating marriages in many communities across the country. My mother and I cried together in celebration, as we thought this day would never come.

It has been eight years since that decision, and there are about 20 million American adults who self-identify as lesbian, gay, bisexual, transgender and queer (LGBTQ+). This number continues to grow, with the millennial and Generation Z generations more open to self-identifying as LGBTQ+. This growing market segment is a land of opportunity for financial and insurance professionals to tap into and provide coverage for a community that has faced obstacles such as the AIDS pandemic, the COVID-19 pandemic, and numerous significant financial market crashes since the 1980s.

Out of the estimated 20 million LGBTQ+ population in the U.S., only 7.6 million of have life insurance coverage. This leaves 12.4 million people uninsured and exposed to financial risks.

Marketplace is red hot for opportunity

According to a 2022 LIMRA study, LGBTQ+ consumers have a life insurance policy ownership rate of 38%, which is lower than the general population at 50%. This is not for lack of interest in the LGBTQ+ community, as 68% say they should own a life insurance policy. The increase in awareness of the need for life insurance is partially due to the COVID-19 pandemic, as one in five LGBTQ+ consumers stated that the pandemic drove them to buy life insurance.

This shows that the LGBTQ+ market is hungry for coverage. To help them with their issues and determine the best policy to fit their needs, we must understand the financial concerns faced by the LGBTQ+ community.

Financial concerns facing LGBTQ+ consumers

The two main roadblocks preventing LGBTQ+ consumers from purchasing life insurance are the perception that it is too expensive and that it competes with other financial priorities. In addition, LGBTQ+ consumers worry about how they would support themselves after a disability or injury, or if they would have enough funds on hand to manage an emergency. These concerns can be easily resolved with insurance coverage, but according to LIMRA, LGBTQ+ consumers currently overestimate the cost of life insurance. This indicates a need for better marketing and messaging targeting the LGBTQ+ community —marketing that will help educate on life insurance and the cost associated with it. Currently, only 25% feel well-informed and knowledgeable about life insurance.

Before I joined the insurance industry in 2017, I had yet to hear about life insurance, let alone the related product lines. To spread awareness of the cost and protections that life insurance brings, we need to dive into how LGBTQ+ consumers currently receive their financial information.

Marketing to LGBTQ+ consumers

A unique thing about LGBTQ+ consumers is that they are more likely to purchase life insurance online. The LGBTQ+ community turns to social media to learn about their financial needs and products, with the top three social media platforms being YouTube (64%), Facebook (57%) and Instagram (42%).^* While there are members who prefer a more digital approach, LIMRA data shows there are about 35% of LGBTQ+ consumers currently work with a financial professional, and 26% are looking to engage with one to assist with their finances. This means that we need to be messaging LGBTQ+ consumers that the person who manages their finances and insurance is an ally to the LGBTQ+ community.

Consider sending out marketing materials through digital or traditional means with same-sex couples and families shown, or consider adding messaging that you are a safe space for the LGBTQ+ community through your web, social and email marketing. These small additions will indicate to the community that you can be trusted, will help them navigate the financial scenes and will help protect them.

The right BGA to help you navigate the market

Financial professionals must find the right institutions to work with to meet their needs as well as their clients’ needs. Knowing they have a choice with whom they do business, it is up to the broker, institution or agency they choose to affiliate with to provide the education, tools, underwriting guidance and products at the right time. Good firms should be committed to providing financial professionals with the proper insurance protection and retirement solutions to meet their clients’ needs regardless of their sexual orientation or gender identity.

There is a greater appetite in the LGBTQ+ community to purchase life insurance and protect themselves and their families in the worst-case scenarios compared to other market segments. Financial professionals must begin to reach out to the LGBTQ+ market and educate them on the purpose and importance of life insurance. I challenge you to consider how you are currently marketing to the LGBTQ+ community and whether you are potentially missing the rainbow of opportunities this community offers.

Timothy Harper is supervisor, sales development specialist, with Crump Life Insurance Services. He may be contacted at [email protected].