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Reach Young Consumers On The Net And On The Job

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 fresh perspectives.

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 the future.

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 their questions.

• Establish a feeling of ease and convenience.

• 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.

Bill Kanter, J.D., MBA, has more than 20 years of experience in the field of estate planning, elder law and financial planning. He is a member of the National Academy of Elder Law Attorneys. Contact him at [email protected] [email protected].

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