Americans are more and more buying life insurance directly from carriers, and are for the first time are buying more term policies than permanent life.
This according to a LIMRA’s U.S. Life Insurance Trends 2016 study, released Feb. 13.
The study indicates more consumers than ever before are saying they have purchased individual life insurance policies directly from a carrier rather than from a financial professional.
The direct purchasing of individual life insurance has increased by more than 25% in each of the last two study periods, with 2016 recording the highest proportion ever recorded in the study at 29%.
“There are many factors that contribute to the increase in direct purchasing, but the overriding cause is the evolution of technology,” said Jim Scanlon, senior director of LIMRA Insurance Research. “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. So the effect is cumulative. As consumers and businesses become more comfortable with technology, we can expect to see that market share grow,” Scanlon said.
Carriers have different options they can use to connect with consumers directly. They can use their own direct-to-consumer (D2C) distribution capabilities or partner with other organizations that may provide better access to the market.
Term life now outpacing whole life
Separately, the study found that among households that own individual life there has been an increase in the number owning both permanent and term coverage. The study shows a record high of 30% of life insurance owners having both policies – an increase of 12 points 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,” said Scanlon. “Today, Americans are more likely to own one permanent life insurance policy and one term life insurance policy rather than two permanent policies,” Scanlon continued. “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 said.
The study showed that for the first time in its history (conducted periodically since 1960), life insurance owners are now more likely to own term life insurance products than permanent life insurance (68% vs 62%). Permanent life insurance ownership has decreased by 18 points since 1992, while term life ownership has increased by 26 points.
This report was based off a sample is 4,167 households. The survey was completed in 2016 and was weighted to the U.S. household population by age, income, race and region.
To view the 2016 U.S. Individual Life Insurance Trends abstract and other resources, please visit U.S. Individual Life Ownership Trends - 2016.
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About LIMRA: LIMRA, a worldwide research, consulting and professional development organization, is the trusted source of industry knowledge, helping more than 850 insurance and financial services companies in 64 countries. Visit LIMRA at www.limra.com.
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