The Shift Towards Flexibility in Life Insurance
The life insurance industry has long been dominated by products with lifetime guarantees, no-lapse provisions, and steady premiums. However, a 2024 study commissioned by John Hancock and conducted by Zeldis Research Associates reveals that consumers are increasingly favoring policies with lighter guarantees and greater flexibility when given the right education and framing.
The study, which included nearly 400 survey respondents and over two dozen in-depth interviews and focus groups, tested the hypothesis that value and flexibility may be more important to today’s life insurance buyers than rock-solid guarantees. The findings were clear: nine out of ten consumers surveyed preferred lower-cost, shorter-guarantee policies when stripped of industry jargon and educated on the mechanics of cost and flexibility.
Consumer Sensitivity to Cost
At the heart of this shift is consumer sensitivity to cost. When presented with a hypothetical product offering the same death benefit at a 15% lower cost, many consumers quickly recognized the value. As one participant noted, “Why pay more for the same thing?” The cumulative savings over decades was seen as a powerful advantage, creating a ripple effect of lower premiums, fewer lost opportunity costs, and more flexibility to invest elsewhere.
Framing the Conversation Around Flexibility
The study’s key takeaway is that the explanation matters. Financial professionals who can successfully frame the conversation around flexibility will be more successful in helping customers. Consumers are not inherently wary of change but of uncertainty. Once they understand how a policy behaves across different scenarios and that premium changes are often unlikely or manageable, their fear dissipates.
Flexibility as a Key Value Driver
Beyond cost, flexibility emerged as another key value driver. Consumers appreciated the ability to make adjustments over time, whether changing premium timing, increasing payments, or adapting to life events. Flexibility gave consumers a sense of control, making them feel “not locked in” and better equipped to handle life’s unpredictability.
Implications for Financial Professionals
The study offers a valuable lesson for financial professionals: flexibility sells, but only when explained. In a time when product differentiation is hard to come by, and clients are wary of one-size-fits-all solutions, understanding and communicating the value of flexibility can lead to heavier sales. As Hector Martinez, Hancock’s head of insurance, noted, “Producers who know the difference will be the most successful in helping customers.”
