LIFE
Responding To Client Needs Amid Changing Market Forces The life insurance industry navigates significant change and disruption while the need for coverage continues to grow. By Stafford Thompson Jr.
A
n interesting dynamic is taking place in the life insurance industry. On the one hand, the need for life insurance coverage continues to grow among consumers. On the other, over the past 18 months, the industry has been navigating significant change and disruption, experiencing a pandemic, volatile equity markets, historically low interest rates and significant regulatory changes. To be successful in closing the life insurance coverage gap that LIMRA and Life Happens say exists for 102 million uninsured and underinsured Americans, financial professionals need timely access to a broad portfolio of innovative solutions that help clients reach their goals and objectives amid changing market forces. 30
InsuranceNewsNet Magazine » July 2021
The Life Insurance Need
According to the 2021 Insurance Barometer Study conducted by LIMRA and Life Happens, only 52% of American adults own some form of life insurance coverage. That marks the lowest level of ownership to date since the two organizations began conducting the study 11 years ago. Taking that a step further, the study finds there are roughly 73 million adults who need coverage and an additional 29 million who need more coverage, representing roughly 40% of the population with an unmet need. The good news is that more and more consumers are recognizing the importance of life insurance, and many indicate they’re ready to take action. According to the Insurance Barometer Study, 36% of consumers said they plan to purchase life insurance within the next 12 months, representing the highest purchase intent in the survey’s history. When examining consumer financial concerns across four categories — health expenses, living expenses, life insurance and saving goals — in 2020, life
insurance surpassed living expenses to move into the third position in the financial concern hierarchy after occupying the lowest tier from 2011 to 2019. Life insurance remains in the third position in 2021, indicating that consumers are increasingly prioritizing life insurance in their financial plans. There’s no doubt the industry is up to meeting this need with products that reflect the times we’re in, just as we’ve always adapted to ensure we continue to provide financial security to clients. If we look back over the years, we see that our industry has responded to different needs with different value propositions at different points in time. If we go back just a decade, we can see how the industry pivoted following the sharp decline in interest rates in 20112012. According to LIMRA data, in 2010, the number of universal life policies sold grew 21% over 2009. Other than whole life, which grew only 2% in 2010, all other product categories had declining sales that year. Fast-forward three years to 2013, and UL sales declined 16% from 2012. Meanwhile variable universal life
