The Changing Dynamics in Life Insurance

A Shift in Thinking Will Help to Grow Your Business

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Life insurance is still an extremely valuable and viable safety net for protecting a financial future. But consumers and the marketplace have changed. And the surest way to kill life insurance is to stick to the status quo.

As the leading edge of the millennial population group ages, they are getting married, buying homes and having children – the typical top triggers for life insurance shopping. As a result, there has been an increase in life insurance sales in this market segment – up 48% since 2010 according to LIMRA’s 2016 Household Trends in Life Insurance Ownership Study.

That’s the good news. But before you become complacent, here are some other results from studies on Millennials and life insurance that indicate some of the misunderstandings and disparities the industry is up against.

  • According to a study from Vertafore, an insurance technology provider, Millennials understand the value of insurance but aren’t willing to give up luxuries, such as cell phones, streaming TV services and going out, to pay for the coverage. Most also feel their workplace life insurance is sufficient.
  • Another study conducted by Life Happens, revealed a major disparity in what American consumers consider important in relation to life insurance. They’ll pay for insurance on their cell phones but won’t pay a few dollars more a year to insure their lives and the futures of their loved ones. Added to this is the misconception that life insurance costs more than it actually does.
  • Consumers also have become accustomed to choice and accessibility through online retail sites, such as Amazon, Walmart and Staples. And more and more often buyers turn to the Internet and social media to research and obtain peer or influencer reviews before making a purchase.

In some extreme cases, people have even turned to crowdfunding sources to try and obtain the money needed to pay for a funeral for a loved one or to help a family with expenses after the primary breadwinner has died. There have been some instances where family, friends and members of a community have gathered together to help out a family in need. But the average GoFundMe funeral, tribute or memorial campaign is $2,200, according to an article on Fox Business News. Another funding site, YouCaring.com, reported that its funeral-related campaign typically raises about $2,000 on average. That is far less than estimated funeral costs of between $7,000 and $10,000.

With a shift in consumer spending priorities, an overestimation of the real cost of life insurance and changing expectations on response and demand, the life insurance industry — and agents, brokers and advisors — need to shift their thinking in order to grow and compete in the new marketplace.

  • Improvements and innovations in smarter analytics will help improve risk evaluation and premium pricing for more personalized and cost-efficient products.
  • New sources of data will allow life insurers to develop clearer health, wealth and behavior profiles of customers. This will allow insurers to target certain customers and be able to offer instant online coverage. Some companies are already moving into this area.
  • Expanded sales and services models are set to emerge as well. This value chain is likely to feature collaborations where specialists can be brought in to support the advice or service offering of an insurance or financial advisor.

It is obvious from the technological advances and implementation happening in other industries that the life insurance industry is lagging behind. The competition is not other carriers. The competition is all the new ways of doing business that today’s consumer expects.

We’ve built LegacyShield as a response to these changing dynamics, focusing on the legacy planning, digital storage and record keeping needs of today’s digital-centric consumer. LegacyShield provides the ability to safely and securely create, store, and share all of a person’s most important information today, tomorrow, and anytime an individual may become incapacitated. I invite you to check out LegacyShield’s Advisor services as we may be able to help propel you into a new level of value added service to meet the demands of the changing dynamics in life insurance.

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