What Consumers Want
Insurance Barometer Study tracks the financial perceptions, attitudes and behaviors of consumers in the United States, with an emphasis on life insurance for the last seven years. Explore some of the finding of this study in the article below.
What Consumers Want By Ayo Mseka
When buying life insurance, they want transparency, simplified underwriting, and easy-to-understand product offerings.
American consumers expect the life insurance industry to remain innovative and continue to meet their needs and preferences, according to the 2017 Insurance Barometer Study. The study finds that 70 percent of Americans who would consider purchasing life insurance would be interested in doing so without a physical exam, also known as simplified underwriting.∗
Now in its seventh year, the Insurance Barometer Study tracks the financial perceptions, attitudes and behaviors of consumers in the United States, with an emphasis on life insurance. LIMRA, a not-for-profit research trade association, and Life Happens, a non-profit educational organization, jointly conducted the study.
The current study looks at the life insurance buying process from the consumer’s point of view and finds that simplified underwriting may impact a consumer’s likelihood of completing the life insurance purchase. Those who are interested in purchasing life insurance through simplified underwriting are drawn to the speed and ease that it offers.
Other appealing benefits include:
- Risk and price transparency (67 percent)
- An unbiased application process (66 percent)
- No need for a medical exam (64 percent)
Closing the Sale
The study asked consumers to rate the importance of various factors when purchasing life insurance. Having a product that is "easy to understand" received top ranking, with 83 percent. The "ability to chat with a person" was next (66 percent), while a "faster sign-up process" was very or extremely important to half of all survey respondents (51 percent).
"Our research shows increasing interest among consumers for speed, ease and transparency in the life insurance purchasing process, including an evolving trend to buy online," said Marvin Feldman, CLU, ChFC, RFC, president and CEO of Life Happens. "It’s interesting to see that this desire is universal, across all generations. A Baby Boomer is just as interested as a Millennial when it comes to making the online buying process fast and easy."
Everyday technology is shaping consumer expectations of life insurance. There is an increased desire to purchase financial products, like life insurance, online. In fact, online life insurance purchase attempts have tripled since the Barometer’s inception in 2011.
Online life insurance purchase attempts have tripled since the Barometer’s inception in 2011.
Peer-To-Peer Buying--An Emerging Trend
The study expanded its reach and took a first-time look at peer-to-peer (P2P) insurance. P2P insurance is an emerging trend in the insurance industry. It utilizes P2P business models to provide coverage through a nontraditional experience geared towards online/mobile applications. Thirty percent of respondents say they would be open to purchasing life insurance via a P2P platform, if available.
"While P2P insurance platforms are still in their early stage, it’s a trend on the horizon that’s worth paying attention to," said Jim Scanlon, senior research director at LIMRA. "Our research shows consumers value interacting with insurance companies in new ways such as simplified underwriting, P2P models and online sales. While the industry has been slow to adapt, we continue to see progress. For example, the percentage of completed online sales has increased by more than 15 percent in the past four years."
Expectations and preferences for purchasing life insurance are rapidly evolving, the study notes. In contrast, consumers still lack an overall understanding regarding the cost of life insurance and who should own it. Having dependents still signals the need for life insurance.
However, according to the study, there is a gap regarding the marital status of those with dependents. Only 60 percent of respondents indicate that a single person with one or more young children needs coverage, compared to 80 percent of respondents who say the same of a married person.
Furthermore, consumers tend to overestimate the price of life insurance. This may deter those who believe it costs too much from purchasing. For instance, when asked how much a $250,000 term life insurance policy would be for a healthy 30-year-old, the median estimate was $500—more than three times the actual cost.
This lack of understanding leads to insufficient coverage. Nearly 40 percent of respondents say they wish their spouse or partner had more life insurance coverage. This has increased by 10 percent since the first Barometer Study in 2011. And while 85 percent of respondents agree that most people need life insurance, only 59 percent say they have life insurance.
Insufficient coverage has grave consequences for countless families. Four in 10 households without any life insurance would have immediate trouble paying living expenses if their primary wage earner were to die.
The 2017 Insurance Barometer Study was fielded in January 2017, using an online panel, which surveyed 2,031 U.S. adults ages 18-75.
∗ For this survey, simplified underwriting is defined as making use of publically available data for risk classification decisions for life insurance pricing, enabling purchase without requiring blood and fluids for medical testing.
This article appeared in Advisor Today.