After Labor Day arrives here in New England, thoughts turn to back-to-school, changing leaves and pumpkin latte season. We become aware of fewer daylight hours and a little chill in the evening air, and we start to look forward to all the pleasures of the autumn season. September also is Life Insurance Awareness Month, an industrywide campaign to raise awareness around the importance of protecting both your loved ones and your financial security with the help of life insurance.
More than half of Americans have some form of life insurance coverage, whether it is an individual policy or coverage through an employer. Although many people own life insurance, there are still a lot of people who need coverage. Based on LIMRA’s 2018 Insurance Barometer Study, 41 percent of Americans indicate that they do not own life insurance. Moreover, our data suggests that an additional 20 percent of the population thinks they do not have enough life insurance.
According to LIMRA’s 2016 U.S. Ownership Study, the top three reasons Americans own life insurance are to cover burial and final expenses (91 percent), help replace lost wages of a wage earner (66 percent), and transfer wealth or leave an inheritance (63 percent). With these very compelling reasons to have coverage, why don’t more people buy it? The most common reason is cost, as more than six in 10 perceive it as too expensive. Other financial priorities (61 percent) and the belief that they already have enough coverage (52 percent) round out the top three reasons.
Misconceptions, particularly among the younger segment of the population, are creating barriers to purchase. Most consumers estimate the cost of coverage at more than three times its actual cost. Almost half of millennials estimate the cost at more than five times the actual cost. Add that to a lack of knowledge on how much and what type of coverage to buy, and it’s no surprise that a large segment of the population is uninsured.
Now is the time for financial professionals to approach prospects – especially young adults — armed with information to overcome the obstacles to purchase. Nearly a quarter of respondents to LIMRA’s 2018 Insurance Barometer Study indicated that no financial professional has approached them about life insurance, with 43 percent of millennials making this claim.
Although the ways consumers purchase life insurance are changing, the professional advisor is still important. About half of all adult consumers visited a life insurer’s website and/or sought life insurance information online, and 29 percent of all consumers indicate they would research and buy life insurance there. People still seek out advisors, however, particularly through social media.
Social media sites have become a common source for reviews and recommendations. More than half of millennials and 40 percent of Generation X are likely to check recommended advisors for a social media presence (Facebook, YouTube and LinkedIn are viewed as most important by millennials).
Consumers also often ask their social media contacts for recommendations on a variety of products and services. One-third of people would ask social media connections for advisor recommendations; that number rises to more than half of millennials who say they would do so. Advisors are well-served not only to establish a social media presence, but also to keep it active and current.
During Life Insurance Awareness Month, let’s take the opportunity to educate more Americans about the realities of life insurance. We as an industry must take steps to provide information in ways that reflect how consumers are thinking about coverage and that appeal to the younger generations. It’s true that it can be difficult to talk about the important reasons to have coverage without sounding cliché. But protecting the ones we love is never cliché.
Gina Birchall joined LL Global as chief operating officer in 2017. In this role, she is responsible for LIMRA’s and LOMA’s legal and accounting departments, information technology, marketing, talent solutions and member relations. Gina may be contacted at [email protected]