Competing priorities and procrastination put life insurance on the back burner; substantial selling opp for advisers
Want to reach out to an untapped audience for life insurance? Try Gen X and Gen Y.
The two groups tend to underestimate the amount of coverage they need to replace their household income, according to a survey of 3,700 individuals conducted by insurance consultancy LIMRA. On average, Gen Xers, who are between 30 and 45 years of age, carry enough coverage to replace 3.2 years of income. Gen Yers — aged 18 to 29 — only have enough insurance to replace 2.6 years of their earnings.
That's simply not enough. Gen X and Gen Y groups require coverage equivalent to 6.9 and 5.1 years of income, respectively, according to LIMRA. A little more than half of the respondents admitted to being underinsured, encompassing some 30 million households.
The two age groups cited three big reasons why they've avoided buying life insurance: competing financial priorities, lack of knowledge and procrastination.
There's another, less obvious reason for the lack of coverage for the under-45 crowd: No one's pitching them on the idea.
“A quarter of underinsured households said they were not approached to buy life insurance,” said Cheryl Retzloff, senior research director at LIMRA Market Research. “Clearly, there is a large market interested in buying life insurance.”
Advisers can play a pivotal role in convincing this market that life insurance is a good idea. Indeed, one out of four of the surveyed consumers said that they began shopping for coverage because an adviser had suggested they needed it. What's more, 57% of the underinsured adults said that they were more likely to commit to coverage if they could confide in the adviser.
Nevertheless, customers said they didn't respond well to a hard sell. Sixty-two percent said they were less likely to buy coverage if the rep wanted to wrap up the sale at the first meeting.
Despite being known as tech-savvy, members of Gen X and Gen Y prefer to buy life insurance through a face-to-face transaction as opposed to performing the purchase on the Internet. Roughly 54% of Gen Y and Gen X participants said they want to buy life insurance in person. Only 20% said they would prefer the Internet.
