Last year, LIMRA released its findings
from a 2010 life insurance
ownership study. According to the
study, 70 percent of U.S. households have
some type of life insurance, leaving 30 percent
of households without the safety net
that life insurance offers. In addition, the
study found that half of all households
said they needed more life insurance to
be adequately protected. At first glance,
these findings may seem negative for the
industry, but they actually underscore the
great opportunity that exists for companies
willing to approach their distribution with
Historically, the majority of households
have bought life insurance by meeting faceto-
face with life insurance agents or brokers.
In fact, 67 percent of individual life
insurance owners in the United States have
bought their policies through in-person
contact. But the world is changing and so
are consumers' preferences.
Today, consumers have more choices as
companies expand their distribution methods
to reach consumers in more cost-effective
ways. Driven by advancements in technology,
consumers' communication preferences
are changing rapidly, and now many
prefer to purchase life insurance without
ever meeting face-to-face with financial
professionals. LIMRA recently asked
household financial decision-makers how
they prefer to buy life insurance now or in
In 2010, almost six in 10 U.S. households
said they preferred to meet face-to-face
with financial professionals when buying
life insurance. But 42 percent of households
preferred to buy through other means - at
their workplaces (19 percent), through the
Internet (16 percent) or through mail or by
telephone (7 percent).
Age was the key predictor of which distribution
method had the greatest appeal
among customers buying life insurance.
The younger the person, the more likely
he or she would buy life insurance without
a face-to-face meeting. In 2010, LIMRA
found that households with adults under
age 35 represented the largest percentage
(40 percent) of any age segment not protected
by any life insurance. How can we
connect with this market?
LIMRA found that adults under age 35
were more likely to purchase life insurance
through the Internet than older consumers
were. These consumers liked the opportunity
to research, compare and shop around
on their own, which the Internet afforded
them. Almost half said they felt less pressure
to buy when using the Internet than
when shopping through other means. Of
course, ease and convenience also played
an important role for those preferring to
use the Internet.
Younger adults also appeared to favor
buying life insurance at work. According
to LIMRA's study, about two in 10
adults under age 65 said they preferred
to buy life insurance through the workplace.
Consumers cited ease and convenience
as the top reasons, but one in five
also mentioned that they trusted their
employer to choose a reputable insurer/
producer to enter their workplace.
Both of these methods are expected
to grow in popularity as the tech-savvy,
younger generations look to buy life
insurance in the future.
Consumers who preferred to buy life
insurance via mail and telephone tended
to be age 55 and older. These consumers
said they liked the ability to ask questions
and to avoid the pressure to buy.
No matter which method appeals to a
particular age segment, there are some key
elements that consumers desire from their
preferred distribution choice. The distribution
method needs to do the following:
• Build an element of trust.
• Allow consumers to get answers to
• Establish a feeling of ease and
• Avoid the perception of pressure
to buy – it makes consumers
uncomfortable, which causes them
to avoid making any decision at all.
More than 58 million U.S. households
recognize the value of life insurance and
understand they need more coverage.
Companies that take the steps to positively
respond to how consumers want to
be treated when buying life insurance will
be in a better position to meet the needs of
this underinsured market.