Advisors look ahead to life insurance in 2024

As 2023 draws to a close, agents and advisors are reviewing the trends that have impacted the life insurance industry during the past several months and are thinking about what is ahead for 2024 and beyond. Two industry experts, John Carroll, SVP and head of life and annuities for LIMRA, and Brian Haney, founder/CEO of The Haney Company, shared some trends that are shaping the industry, what is in store for 2024 and 2025, and steps advisors can take to make the most of these trends.

Life insurance premium growth

Carroll said that in 2022, total life insurance premium increased 1%, setting a new sales record. Through the third quarter of this year, total life insurance premium is level with sales over the first three quarters of 2022. LIMRA is forecasting total individual life insurance premium to increase by as much as 5% in 2024 and 2025. Things are expected to settle down in 2024, Carroll explained. No major regulatory issues appear to be on the horizon, and the economy is also expected to be OK despite some consumer uncertainty due to inflation and lingering concerns about the economy.

There has also been a clear drift toward digital engagement, especially by younger consumers, Carroll added. According to LIMRA’s research, 81% of Gen Z and 75% of millennials are turning to social media for discussion, advice, and information regarding financial topics.

In addition, 2024 will see growth in insurtech firms, as the industry continues its efforts to streamline insurance processes. The use of technology will not go away because the industry needs it, Carroll pointed out. Covid forced the financial-services industry to invest in technology, and this movement towards greater use of technology will continue to move forward.

Social media prospecting has also grown and will continue to grow, Carroll added. For example, many agents and advisors are using LinkedIn for prospecting. While there has been a huge shift towards the use of technology, he cautioned that human interaction is critical. Those who do well will have a digital presence, coupled with a strong physical connection.

Addressing the coverage gap

Despite the rosy estimates for life insurance premium growth in 2024 and 2025, Carroll pointed out the life insurance coverage gap among American consumers. This need gap will continue to be an issue for insurers and consumers alike.

Although quite a few consumers see the value of owning life insurance, only 52% of U.S. adults report having life insurance coverage, either individual, group, or both. But 41% of American consumers say they need life insurance, or they need more life insurance. This represents more than 100 million adults. “So, the need for life insurance is there,” he said.

To address this need and close the gap, Carroll said that agents need to understand the realities that people are facing. The problem is that many of them do not know what type of insurance to get or how to buy it. “You have to learn how to reach these people,” he said. “Buying life insurance is a complex process. So, help them understand what they need and how to fill that need.”

As agents and advisors work with their clients and prospects to reach more people and close the coverage gap, Carroll said that they need to:

• Have a plan.
• Come forward as trustworthy.
• Demonstrate that they have experience.
• Take a holistic approach. “Regularly ask your clients what their needs are because their needs will change over time,” he said.
• Realize that selling life insurance is not a “one-and-done process.”

More trends shaping the industry

In his insights, Haney cited the financial-services industry’s leverage of technology and artificial intelligence (AI) to create better decisions and outcomes for all. The reality, he added, is that computers can add significant value to the overall life insurance market experience, both for consumers and providers.

Whether it is reducing expenses associated with underwriting, improving margins on existing risk blocks, providing a more user-friendly interface for producers and consumers, there are various opportunities to build a better marketplace where more Americans have better access to policies, and we can reduce the underinsured gap that exists in our country, Haney said.

“I personally feel that this should be a top industry imperative. The question cannot be: “Should I consider adopting AI/digital tools or not?” The question must be: “What tools are the most relevant to my infrastructure and can add the most value, reduce friction, improve processes, and ultimately deliver better policy experiences?” he said.

Better choice architecture is another trend, noted Haney. Technology and a continued emphasis on doing more for more people should hopefully continue to facilitate strategic conversations and foster collaboration at both the insurance company level and the practitioner level on how the industry can provide increased value across “main street America.”

“Recognizing the dramatic shift in demographics in that we are becoming a “majority minority Nation” should spur reflective planning discussions on how we engage more effectively,” Haney said. “Life insurance, in particular, is not seen or experienced in a uniform manner across all audiences, and this demands a renewed attention to how we deliver it.”

The need to understand how to serve an increasingly diverse marketplace should help the industry cast a better net of product offerings and delivery systems, while empowering practitioners to have better interactions with minorities and markets that have not been as well-served or targeted historically, Haney said.

“Corporate leaders must develop inclusive practices both internally and externally, as the diversity among stakeholders demands this approach. ” Perhaps, it can be as simple as asking the question: “Who’s not buying our stuff that should be, and what can we do about that?” he said.

Lastly, financial professionals and insurance agents must recognize the fact that the industry is at a pivotal moment in history: “How will we remain relevant to a consumer population that has grown increasingly wary of working with agents and advisors and has more tools now than ever to buy financial products and services online and without the help of a professional?” Haney asked.

“Will we embrace radical changes in how we engage with consumers, relate to an increasingly diverse marketplace that communicates differently from what we may be used to, and will our practices evolve to meet the growing needs of consumers, and work to change the narrative of how people perceive getting help with their finances and the need to work with a professional?”

Practitioners must stand up, become better communicators on digital platforms, and recognize that marketing and business development are no longer about lead generation but about thought leadership and changing narratives, Haney said.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].