October 15, 2020

Life Insurance Ownership Rates Are Declining, More People Want To Buy Online

It seems that people are increasingly optimistic about their chances of living to a ripe old age.

Maybe it’s the fact that the average age of death has been steadily increasing. Life expectancy in the US is now over 78 years old when back in 1900 it was only 47. Or maybe it’s all these superhero and action movies that are subliminally convincing us that we are hardier than we really are.

Here's the Gist
  • The rates of life insurance ownership are declining
  • Despite this, the intent to purchase is higher than ever
  • Consumers are looking for easy ways to purchase life insurance, particularly online
  • Consumers prefer simplified underwriting

The recent 2020 Insurance Barometer Study by Life Happens and LIMRA brings us more details. Let’s take a closer look.

Declining Life Insurance Ownership Rates

In 2011, 63% of Americans owned life insurance. However, the new data shows us that the ownership rate has fallen to only 54%.

Why the decline in life insurance ownership?

Researchers attribute it mostly to a broad decline in employer-paid life insurance benefits. However, other factors may be at play as well. Two-income households are on the rise with just 4.9% of families with children having an unemployed member in 2019. Couple that with the trend in smaller families that has been going on for decades.

In short, people may feel less of a need for insurance as the surviving member may not face as big of a financial burden as in the past.

A misunderstanding about the cost of life insurance may also play into it. Half of millennials think that term life insurance costs about 6x the actual amount!

Rising Purchase Intent

The LIMRA study found that 36% of Americans want to buy life insurance within the next 12 months. This is the highest-ever recorded intent to purchase.

Perhaps the recent coronavirus pandemic has shifted people’s perspectives on death somewhat. Tomorrow has never been promised to anyone and people actually have very little control over whether they will live or die. Anything can happen, and it’s best to be prepared.

This has always been the case, but events like the pandemic force us to face the fragility of our existence.

Rapidly Rising Preference for Buying Life Insurance Online

Understandably, though people want to buy life insurance, they are hesitant to go running out to get it. All we hear about is the importance of social distancing and staying at home to limit exposure to COVID-19.

Historically, people have preferred to buy life insurance with an agent. It feels a little confusing and most people want to be able to ask questions and assure themselves that they are getting the best deal for their situation.

Has this changed? Yep. In 2011, 64% of consumers expressed a preference for buying with an agent as compared to just 41% in 2020. Additionally, the specific preference for buying life insurance online nearly doubled from 17% in 2011 to 29% in 2020.

Not only are consumers increasingly more comfortable with technology and purchasing all sorts of products online, but also, it’s a way to conduct your business without potentially exposing yourself to COVID-19.

It’s probably quite unlikely, but how ironic would it be to catch COVID-19 when you go out to purchase life insurance? If things don’t go well, we can promise that neither you nor your family will be laughing about it.

Preference for Simplified Underwriting

Additionally, 66% of consumers like things quick and easy, especially when buying life insurance. No one wants to sit around and contemplate their potential impending death for hours on end no matter how unlikely it may be.

To that end, instead of pages of insurance jargon, 58% of consumers want to see transparent paperwork with a clear list of benefits, risks, costs, and exclusions. And 66% want an unbiased and objective underwriting with no hidden agendas.

Additionally, 56% of consumers want to avoid medical exams and urine and blood samples. Who can blame them? Nobody likes needles!

In response, insurance companies are making it easier to buy life insurance online often without the need for medical exams and other complicating factors.

Ready to Buy Life Insurance Online?

Where would you fall if surveyed for this study? Do you have life insurance? If yes, do you have enough? Employer-paid programs are often insufficient and need to be supplemented.

Or are you one of the ones planning to buy life insurance within the next 12 months? Don’t delay. Life is too uncertain and your family is too precious to wait.