Just over half of American consumers currently have life insurance. That means there are approximately 102 million adults in the United States who are either uninsured or underinsured. Despite this, people consistently report that they believe they need more life insurance.
This disconnect adds up to a significant life insurance gap. The current climate offers many opportunities for insurance agents and financial professionals to help consumers better protect their families.
Here are seven ways you can be part of the effort to close the insurance gap:
1. Build on momentum.
2021 was a strong year for life insurance sales. In the first half of the year, there was an 8% increase in the number of policies sold compared to 2020. That's the biggest growth since 1983, according to LIMRA. After a year of not being able to meet with their advisors face-to-face, people were eager to get back on track. That is still the mindset, to a degree, and now is the time to help clients tackle financial and insurance goals with fresh eyes.
2. Understand the heightened awareness that the pandemic has caused.
According to LIMRA, 6 out of 10 consumers said that COVID-19 had made them more aware of the benefit of life insurance. In fact, 31% said that the pandemic made them more likely to buy life insurance.
3. Help consumers overcome misconceptions about the cost of life insurance.
As many as 65% of consumers surveyed believe that life insurance is too expensive. Younger people and people who currently don't have life insurance are especially likely to believe it's more expensive than it is. Talking real numbers and delivering quotes can help people get a better picture of life insurance costs.
4. Lead clients through conversations about budget priorities.
Living expenses, debt, healthcare expenses and saving for retirement: consumers frequently cite all of these as budget priorities. One of the best things you can do is to get an aerial view of your client's spending and saving profile. Have a frank discussion on priorities and work with them to place life insurance on the priority list alongside other important expenses.
5. Educate consumers about what is adequate coverage for their needs.
According to LIMRA, 44% of households surveyed said they would face financial hardship within six months if the primary wage earner died prematurely, while 28% said it would be one month. That's a sobering statistic, and one reason why you need to help clients and potential buyers see themselves in the data. Using a needs analysis process can help your client understand the amount of coverage they truly need.
6. Dispel common myths about life insurance.
About 30% of consumers think that life insurance is mainly for burial costs. They don't realize that life insurance can help replace income or provide a way to leave a legacy or pass on an inheritance. People who receive life insurance death benefits do not have to pay taxes on the money. But about one-third of consumers don't know this and assume life insurance benefits are taxed. It's important to educate clients about the details of how life insurance works.
7. Use more digital tools when working with millennial clients.
It's important to be aware of generational differences. While data is effective when talking with Gen X clients and personal connections go a long way with baby boomers, millennials (born between 1981 and 1996) are more interested in using digital tools, such as online calculators, quoting tools and other apps. They want to discover answers themselves using frictionless digital interactions.
Ready to get started educating your clients and helping close the life insurance gap? Check out this list of frequently asked questions to expect from clients about life insurance.