The life insurance industry continues to face a persistent challenge: despite Americans recognizing their need for coverage, actual policy ownership remains low. According to LIMRA’s latest Insurance Barometer study, just over half of Americans have life insurance, representing a decline from 63% in 2011. To address this issue, LIMRA hosted a LinkedIn Live discussion with industry experts to explore potential solutions.
The Coverage Gap Persists
Bryan Hodgens, senior vice president and head of LIMRA Research, highlighted that approximately 100 million Americans acknowledge their need for life insurance. “There’s a huge demand out there for this product,” he noted. However, the number of people who actually purchase policies remains significantly lower than those who express intent. In 2024, only 9.4 million policies were sold, a figure that has remained relatively flat year over year.
Understanding Consumer Hesitation
A new study conducted by LIMRA in partnership with Bain & Co. reveals that the demand for life insurance is widespread across various age groups and income classes. Andrew Schwedel, partner at Bain & Co., explained that the primary issue lies in consumer overwhelm and intimidation by the complexity of life insurance products. “People are doing some research, talking to friends and family, and looking at online sources, but they’re recognizing that they need help navigating the process,” Schwedel said.
The Importance of Education and Professional Guidance
The study found that consumers who meet with financial advisors are more likely to purchase life insurance policies. These potential buyers emphasize the importance of education in the decision-making process. Forty-eight percent of respondents strongly agreed that they need to understand life insurance before making a purchase, while another 42% agreed. Hodgens noted, “To me, that’s telling us that education is really important.”
The Role of Social Media and Digital Platforms
In the absence of professional guidance, Americans are turning to social media for financial information. LIMRA’s research shows that 62% of respondents use social media for this purpose, with the figure rising to 80% among millennials and Generation Z. However, Hodgens expressed concerns about the quality of information available on these platforms, citing the presence of influencers and potential misconceptions.
Challenges in the Digital Age
Schwedel pointed out that artificial intelligence is having an unintended negative impact on life insurance marketing. AI-assisted searching is leading to “zero-click searches,” where consumers receive AI-generated summaries and may not engage with the underlying content. This development poses a challenge for companies that are not represented in the source material used by AI.
Addressing Misconceptions about Cost
Another significant issue is the widespread misconception about the cost of life insurance. Hodgens noted that consumers often overestimate the cost of premiums by six to 10 times their actual value. In reality, life insurance is more affordable and accessible than many people believe.
Looking Ahead
Despite these challenges, industry experts see significant growth potential in the life insurance market. Schwedel concluded, “We think the opportunity here is really huge, if people can figure out how to get this marketing and sales motion more joined up.” With the right strategies and a focus on consumer education, the industry could experience substantial growth in the coming years.
