Sales of life insurance are growing at healthy rates, but there’s always room for improvement. In a survey of executives at several firms around the world, LIMRA found that future prospects and growth are among the biggest concerns. Devising a plan of action and following through on these goals means ultimately focusing on understanding what consumers need in a life insurance plan. Of course, this doesn’t make things much easier, considering the huge variability in preferences and desires among life insurance plan participants. However, understanding this research can provide an excellent starting point for financial professionals looking to push their business forward.
Focus on benefits
As LIMRA noted, the primary way life insurance needs are calculated is through income replacement via benefit payouts. Usually, when a consumer is looking to begin a new policy or change an existing one, they use their current household income as a starting point to determine the right amount of coverage.
“Income replacement is a primary concern among consumers.”
One of the primary disconnects between insurers and consumers, in LIMRA’s view, is in the way benefit payouts are marketed. Most consumers are told that benefits get paid out as a lump sum upon death, assuming everything else is in compliance with the policy stipulations. However, according to LIMRA’s 2016 Insurance Barometer study, most life insurance consumers – around 60 percent see their policy as a replacement for lost income. Millennial consumers hold this belief to be especially self-evident, based on the study’s findings.
While most policies can be paid out as a lump sum, LIMRA noted that most can also be arranged to be paid in regular intervals as well. This would satisfy the majority of life insurance consumers who say they prefer to have a source of income in case that were ever lost in the form of the sudden death of a family member. Plan providers who offer these options are more likely to attract and retain clients over the long-run.
It’s only natural that consumers want the best possible value out of their investment in an insurance product. In this regard, logistics can pose a problem. Needs change over time, and a policy that a family signed up for just five years ago may not be right for their present situation. LIMRA researchers made the point that for the insurance provider, over-coverage isn’t necessarily a problem they would need to address immediately. But in the long run, a lack of plan flexibility could drive consumers to look elsewhere once their current policy expires.
LIMRA’s Insurance Barometer found that offering a flexible coverage policy would be of interest to most insurance consumers. More than 30 percent of respondents said they were either “extremely” or “very interested” in coverage that changed over time. Furthermore, these strongly interested people generally were younger parents, and also believe they are underinsured. By offering products with more possibilities than what a family or individual initially signs up for, providers can maintain strong interest and engagement throughout the life of the plan, and are much more likely to retain these consumers in the future.
Business often suffers for prioritizing growth but focusing only on short-term goals. This is rather antithetical to the life insurance business, one founded on the principle that it always pays to plan for the long-term. Companies that can meet their clients in the middle like this are much more likely to find a sustainable business model along the way. By prioritizing a stronger bond between clients and corporate, forward-thinking insurers are sure to see measurable results.