How Can Life Insurers Reach More Consumers?
What makes life insurance buyers tick? And perhaps more importantly, why is it that so many people still don’t have life insurance protection? Or, if they do have coverage, don’t have enough to properly secure their financial future?
These were some of the key questions Deloitte Research sought to answer with a pair of online surveys — one involving 1,071 consumers with life policies and the other querying 1,000 currently without coverage. The surveys were undertaken to provide life carriers and their agents with actionable insights into the beliefs, motivations, influences, priorities and preferences of buyers and non-buyers alike.
Specifically, the surveys examined how respondents perceived the value of life insurance, where the coverage ranked among their other financial priorities and which channels they preferred. Also identified were some of the marketing challenges life insurers face in expanding their penetration among the uninsured and underinsured.
The surveys focused on three distinct time perspectives — how respondents think about life insurance today, a look at their past purchase experiences, and a peek ahead into how (and how much) respondents intend to buy in the near term.
Some of the highlights from the survey results, compiled in “The Voice of the Life Insurance Consumer” from Deloitte Research, follow:
• Those with life insurance coverage more strongly understood the value and benefits their policies offer than did those without coverage. Yet the surveys found plenty of opportunity to further educate existing policyholders, as half or fewer of those with coverage don’t associate their policy with certain common needs that can be filled by life insurance products.
• While life insurance is not the top financial priority for most, the coverage is very prominent on the to-do list for many respondents. The survey found a significant number of consumers intend to buy a new policy in the next two years, both among those currently without insurance as well as among respondents looking for additional coverage.
• The surveys revealed a fundamental failure to communicate, as many of those who are currently uninsured noted that a prime reason they don’t have coverage is no one has asked them to buy it. Even those with insurance open to buying additional coverage often say they have not received offers from their agents or carriers.
• However, most of those who have, in fact, received solicitations to buy a policy said those pitches ended up not influencing their purchase decision. So they are either not hearing from life insurance sellers, or the sales message they are receiving is not persuasive.
• At the same time, the surveys indicate carriers cannot afford to wait for prospects to seek them out, as many respondents said they don’t shop for life insurance on their own initiative.
• A generation gap was uncovered in a number of responses. The youngest consumers were much more likely than older buyers to find the application and underwriting process to be too onerous.
• Financial triggers are very significant in the life insurance purchase decision (such as getting a raise, thereby easing affordability concerns) and so are familiar life events (to provide income replacement and asset protection after getting married, having children or buying a home).
• However, because many respondents are either not aware of or don’t understand the broader roles and benefits of various types of life insurance beyond merely providing death benefits, they don’t necessarily think of the product as a more comprehensive, longer-term financial planning solution. For example, certain kinds of life insurance can help them fund their retirement or college expenses for their children.
Life insurers and their agents have some serious macroeconomic hurdles to overcome as they look to increase sales and bolster profitability. For many, life insurance is taking a back seat to other financial priorities, as families deal with unemployment, a severe drop in the value of their homes or other pocketbook challenges.
However, from these surveys, it is clear that life insurance is very much on the minds of many consumers — both those respondents without coverage as well as those who already have a policy.
Regardless of the state of the economy, life insurance fulfills a variety of financial needs, but it must be more effectively marketed to make sure both the uninsured and underinsured populations understand all that a life insurance policy can offer them.
A marketing campaign focused on educating the general population (perhaps even a joint, industry-wide initiative) might be called for since the survey showed that many respondents — even those who already have the coverage — do not fully appreciate the potential benefits versus the likely cost of life insurance. Such information-based outreach efforts could help spur greater penetration, higher market share and organic growth for carriers and agents alike.
Far from being a mature market, there is a large uninsured and underinsured population to target if the right products, marketing messages and delivery systems can be devised and implemented to bring these prospects into the fold. In some cases, all you might need to do is ask.
By Sam J. Friedman for LifeHealthPro.com Sam Friedman is insurance research leader at Deloitte’s Center for Financial Services in New York. He previously served as editor-in-chief of National Underwriter’s Property & Casualty magazine and online news service for many years.