Although Life Insurance Awareness Month has come to a close, it is still a perfect time for financial professionals to reach out to both new and existing clients to discuss the benefits of life insurance and how to protect their families.
Consumer interest in obtaining life insurance coverage has risen since the onset of the COVID-19 pandemic. In a recent study by the Life Insurance Marketing and Research Association (LIMRA), one out of three consumers said they are more likely to buy a life insurance policy because of the pandemic.
What’s more interesting is data from LIMRA shows that interest is highest among younger generations ─ 45% of Millennials are more likely to buy life insurance because of COVID-19, compared with 31% of Gen Xers and 15% of Boomers.
Even with this heightened awareness of the need for life insurance, financial professionals may find common misperceptions about life insurance still exist among consumers. For example, more than half of those surveyed by LIMRA overestimated the cost of life insurance by as much as threefold. This misperception that life insurance is too expensive was significantly more prevalent among younger consumers. According to Lifehappens.org, 44% of Millennials thought the cost of term life insurance policy was more than $1,000 a year – when it’s closer to $160!
Consumer demand for life insurance has also risen because fewer employers are providing this type of protection coverage as part of their benefits packages over the past five years. This means many consumers will need to plan and save for retirement themselves. For financial professionals, this presents an opportunity to educate clients about the impacts of not having their own individual life insurance coverage or letting an existing policy lapse.
No need to play catch-up
Given the tendency for consumers to put off addressing a financial need until it’s pressing, many married couples often don’t make a major commitment to retirement savings until they reach their late 40s or 50s. As the probability of living on their own without the accumulation from investing in a life solution or other product becomes more of a reality, these older consumers often have to play catch-up by leaning on their own retirement savings.
A savings plan can be derailed if one partner dies without adequate life insurance. You can help clients understand the value of having sufficient coverage to prevent spouses from getting caught in this trap. When one spouse has a policy in place, the surviving spouse is more likely to be able to retire when they want to and have a comfortable income to live on once they stop working.
An effective retirement savings tool
Many of your clients may be interested to learn that life insurance isn’t only about protection planning for family and loved ones upon death. There are additional financial benefits to owning life policies that consumers are often not aware of. Helping to educate your clients on permanent life product options that allow policy holders the ability to build cash value and draw on it for additional income during their retirement years are two additional benefits to consider.
These types of policies are particularly appealing for those who don’t have employer-sponsored retirement plans, have maxed out contributions to their workplace retirement plans, or don’t meet the income eligibility requirements for contributions to a Roth IRA. Given that there are not many contribution or income restrictions with life insurance, cash value life policies offer an effective way for clients to save more for retirement and build a source of retirement income. Nationwide offers a number of ideas on how life insurance can be used strategically to help clients plan not only for retirement, but also for education expenses and long-term care insurance needs.
Life insurance in the digital age
Today’s consumer is also changing the life insurance industry through their preference to shop for and purchase life insurance online. According to LIMRA, 48% of Americans are more likely to buy life insurance through an automated (accelerated) underwriting process. Consumers are more accustomed to simple, self-service processes and one-click buying options, so both financial professionals and insurers need to adapt to meet consumer demands.
Life insurers are investing more than ever before in automation and digitalization to create an enhanced customer experience that assists financial professionals and their clients by simplifying the often complex process of purchasing life insurance.
Resources to help you
Nationwide offers a suite of products and digital tools and resources that can help you make the process of learning about and obtaining life insurance much easier for clients. The days of clients overlooking the need for adequate life insurance coverage may be over. In a post-COVID world, more clients are ready to hear the message you can deliver.