Buying Life Insurance Should Be Like Buying Any Retail Product

A new LIMRA study says consumers expect transparency from a life insurance purchase, and they want that transparency to follow the same path as it would when they buy other retail or travel products.

According to this latest study, consumers want simple-to-understand terms and a glossary of terms to help them make informed decisions. They’re also seeking clear and accurate ways to compare companies and products, and they want the ability to make a quick call or to chat with a sales representative to fill in any blanks in their research.

Bottom line? Consumers are looking for an easy to use, accurate and fast online insurance quote application.

While it might seem buying life insurance isn’t the same type of purchase as buying clothing, a car or a vacation, consumers say they want to start the buying process online to simplify the purchase.

The LIMRA Research shows prospective buyers search for insurance online for a couple reasons: to gather information before making a personal contact or to gather information before completing their insurance purchase entirely online.

So What Do Buyers Want From Online Insurance Companies

The data from the LIMRA focus group study shows that consumers want the ability to compare companies and products to help take the mystery out of life insurance and they’d like to be offered quotes without restrictions.

Yet another key requirement is that consumers want to see product quotes without the need to register or to provide contact information upfront. They want their provider to be available online – and in person, and they say the ability to call or chat with a real person is essential to the process.

While many consumers at put off by the prospect of a physical exam – they find it too invasive – they are generally aware that automated underwriting options can provide a more expensive option up front.

LIMRA conducted four focus groups of consumers who purchased life insurance within the past 24 months and the latest study reflects the findings from these groups.

The findings also revealed that the direct purchase of individual life insurance has increased by more than 25 percent over the course of the most recent last study periods.

Jim Scanlon, senior director of LIMRA Insurance Research, says there are a number of factors responsible for the increases.

“There are many factors that contribute to the increase in direct purchasing, but the overriding cause is the evolution of technology. Direct marketing through mail, phone, radio and television each acquired a share of the market when they were introduced. All those methods still hold a share of the market, and now powerful online marketing capabilities are taking a share of the market,” Scanlon says. “So the effect is cumulative. As consumers and businesses become more comfortable with technology, we can expect to see that market share grow.”

Term Life Insurance Purchases Now Outnumber Permanent Policy Buys

The study also found that among households that own individual life, a record high of 30 percent of life insurance owners also own term policies, and that represents an increase of 12 points over the course of the last in six years.

“While the average number of life insurance policies people own remains two, there has been a shift in the type of products owned. Americans are more likely to own one permanent life insurance policy and one term life insurance policy rather than two permanent policies,” Scanlon said. “A factor that could be contributing to this trend is term life insurance offers more coverage for the dollar than a permanent life policy. Due to increases in the cost-of-living and higher amounts of household debt, consumers may be more focused on getting the coverage amounts they need at the most affordable price,” Scanlon explained.

For the first time in the history of the LIMRA study, which has been conducted periodically since 1960, life insurance owners are likely to own term life insurance products than permanent life insurance (68% vs 62%). While permanent life insurance policy holdings have decreased by 18 points since 1992, term life policy ownership has increased by a whopping 26 points.

This report was based on a sample of 4,167 households, and it was weighted to average U.S. household populations by age, income, race and region.

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