Despite a broad array of ways to buy life insurance -- in person, by phone, by mail, through seminars, at the workplace and online -- LIMRA's 2011 Life Insurance Buyer/Non-buyer study found that only 39 percent of U.S. households recall having an opportunity to buy life insurance in the past two years.
"This phenomenon is especially true for single people -- a growing segment of the population because of a decline in marriages and an increase in divorce during the past few decades," noted Cheryl Retzloff, senior research director, LIMRA Markets research. "Only 26 percent of single people recall having an opportunity to buy life insurance (compared to 74 percent of married people). We also found that those singles who did recall having an opportunity to buy life insurance are almost as likely to buy life insurance as married households (51 percent versus 58 percent). Companies could grow their life business by more aggressively pursuing this untapped market."
Earlier this year, LIMRA uncovered another growing market -- single mothers. Having children is a key reason people start shopping for life insurance and a recent LIMRA study found single mothers have unmet life insurance needs. One third of single mothers who are the primary wage earners in their families had no life insurance coverage at all. And even single mothers with life insurance coverage are underinsured: Two thirds felt that their families could not cover everyday living expenses for much more than a few months should they die.
This event was open to LIMRA members only. Participants included distribution leaders and business analysts from insurance companies nationwide.
Online Shopping Less Effective
The study found that twice as many households shopped for life insurance in 2011 as in 2003 (22 percent versus 11 percent). But fewer households that shopped bought in 2011 than bought in 2003 (54 percent versus 70 percent). The eight years between the two studies have seen tremendous growth in opportunities to buy online and probably in consumer awareness about the ability to buy life insurance online. These online opportunities may be the main reason more households report shopping for life insurance in 2011. Online opportunities may also be why fewer households bought after shopping. Shoppers who shopped only online were considerably less likely to buy (36 percent bought) than were shoppers meeting face to face with sales reps (74 percent), or even those dealing directly with insurance companies or sales reps without meeting face to face (67 percent). Who is more likely to buy?
There were only slight differences separating buyers and nonbuyers in regard to age, household income, and marital status. As noted, the key differentiator between those who buy life insurance and those who don't is whether they have children under age 18 in the household. Almost half of buyers have children in the household, compared with 38 percent of nonbuyers. Not only does having or adopting a child trigger households to shop for life insurance, it motivates them to buy: Seventy-three percent of households that shopped for life insurance because of births or adoptions actually bought policies.
Nonbuyers comprise two segments -- the 70 percent who are still deciding whether they will purchase and the 30 percent who have already decided not to buy. Only 14 percent of nonbuyers actually decided they did not need life insurance and would definitely not buy.
LIMRA's research indicates that following up with prospects who had investigated or inquired about life insurance is extremely important, whether that inquiry was face to face, on the telephone, through the mail, or online. About one fourth of each generational group and middle- and high-income households' most important reason for not buying was because they were still shopping.
"There are clearly opportunities for insurers to reach out to underserved segments of the population, like single people, who are in need of life insurance," Retzloff said. "In addition, insurers and producers need to be cognizant that some life insurance shoppers -- especially those under age 46 who have dependent children in the household -- may be slow to make a decision and may need someone to help them make the final decision to move forward and buy."