Life Insurance Trends In 2018

As the world changes and consumers become heavily digitized, there remains a noticeable gap between consumers and education about all things finance, especially life insurance.

The more companies work to meet the demands of consumers and provide better access to information, the less people will be left in the dark, policy-less.

For now, lets look over the main trends in life insurance throughout the year.

Life Insurance Ownership Has Decreased 

Life insurance ownership has declined over the last 30 years, a trend which started as early as 1960.

By 1989, 77% of homes had life insurance. But, by 2013 that dropped to 60%. Why?

Data from the Survey of Consumer Finances Reveals that, for example, African American households are more likely to own life insurance policies compared to white household of the same demographic and socioeconomic characteristics.

This stands in contrast to ownership over other financial assets and it can be speculated that higher mortality rates for this group are responsible.

There are not only changes over time here, but with regard to income levels, socioeconomic levels, age groups, and education. The changes are not simply the result of one or two key items, or they would not show up across the entire population.

Changing consumer habits across the whole population is indicative of a much larger shift—and clearly, insurance companies are taking note of that shift, working tirelessly to meet the demands of their changing target markets.

Cash Value Life Insurance Policy Ownership Has Decreased

Perhaps more relative is the fact that there has been a drop in cash value policies and a moderate drop in term policies between 1989 and 2013 in spite of demographic and socioeconomic trends.

Ownership has decreased across the population as people are paying more attention to where they need to allocate money the most.

Need for Retirement Supplemental Retirement Funds is Increasing

Customers today are worried about having enough money for retirement, in fact, 42% of those surveyed were focused on it with 1 in 5 saying supplemental retirement is their biggest concern.

Changes in the Life Insurance Industry in the last 30 years:

19892013Change from1989-2013
Life insurance ownership over time (%)% changeLevel change
Any life insurance76.760.2–21.5–16.5
Term life insurance58.150.2–13.5–7.9
Cash value life insurance37.418.7–49.9–18.7
Value of life insurance policies through time
Face value, term life insurance$155,996

($295,301)

$353,288

($1,409,545)

126.5$197,292
Face value, cash value life insurance$157,902

($356,907)

$225,894

($1,279,715)

43.1$67,992
Value of cash value policy$20,290

($89,452)

$35,896

($217,287)

76.9$15,606
Mean value relative to annual income
Face value of term/income2.05

(4.03)

3.28

(5.67)

60.01.23
Face value of cash value/income2.07

(5.03)

2.43

(10.71)

17.30.36
Cash value of cash value/income0.24

(0.55)

0.36

(1.07)

52.40.12

Life Insurance Coverage By Percentage of Income Has Decreased

If we look at income quintile percentage, we can see drastic changes too:

19892013Changes from1989-2013
Life insurance by income quintile (%)(% change)(level change)
Less than 2043.526.8–38.4–16.7
20-39.965.144.5–31.7–20.6
40-59.983.961.2–27.0–22.7
60-79.990.877.3–14.8–13.5
80-10093.985.2–9.2–8.7
Highest income quintile-lowest income quintile50.458.4

Now, right after 2013, customers started to feel financial pressure lift. This is why now, 70% of Americans know that they need life insurance.

41% of Americans Do Not Have Life Insurance Coverage

As it stands 41% of Americans do not have any coverage and of those who do have coverage, ⅓ of them only have basic policies.

That said, 4 in 10 are under-insured, meaning they do not have enough coverage in their life insurance policies to cover the finances they leave behind.

The Need for Life Insurance for Married Couples has Increased

39% of spouses and partners wished their other half would get insurance, but most couples did not know what coverage (if any) the other person had. This is the highest level of concern we have seen in the last 7 years. Prior to now, the highest level of concern spouses had for their partner was 23%.

Clearly an indication of how couples are communication (or rather, not) in this technologically-driven world, it highlights the need to really explore life insurance as a couple and why we need more education about the policies out there.

Most People Don’t Purchase Life Insurance Because They Don’t Understand It

On that note, 83% of Americans felt that they might consider buying a policy if life insurance was easier to understand.

Millennials Know Very Little About Life Insurance

The younger groups, Millennials in particular, have never been approached by anyone to purchase a life insurance policy and it wouldn’t really help anyway as 4 in 10 believe they are unqualified for coverage. This is two times higher than any other age group including Gen Xer’s and Baby Boomers.

It is the Millennials, oddly enough, who believed they understood the most about life insurance policies and seniors who felt they understood them the least. Insult to injury, when asked to guess at prices for premiums, Millennials performed the worst.

Customers Prefer No Medical Exams

Now, age and other demographic discrepancies aside, what really stands out in current trends is that all consumers across the board are in favor of not undergoing medical exams.

  • Consumers of all ages want unbiased information.
  • They want transparent risk classifications and pricing.
  • They want faster, simpler policies that are instantly approved.

Now, for each age group, these differ in order of importance. For example, Gen X wanted unbiased information which explains why there has been an increase in the use of online brokers for information.

Millennials, on the other hand, wanted faster approval, hence the recent technological changes that have automated the underwriting process for policies.

Technology Trends in the Life Insurance Industry

The Internet Has Made A Huge Impact

People are leveraging the internet today. Twenty and even 30 years ago, getting life insurance took a lot of time and you had to meet with a representative. But today you can get a policy without ever having to meet anyone.

Getting Life Insurance is Faster than Ever Now

Customers want faster service. They don’t want to wait six to eight weeks for something to be processed so that they can be told whether or not they have coverage.

In a world where literally anything can be found instantaneously, life insurance has had to step up its game.  People are turning to the internet for not only generic quotes so that they can compare things themselves but complete the underwriting process.

Life Insurance Customers are Now in Control

On that note, clients are reaching out to companies. Companies are no longer reaching out to clients. With mobile apps and customer-friendly websites, people are literally just a click away from finding a company they want to work with.

This means that companies are doing less work, saving more which they would have spent on traditional marketing methods, and the customer is the one doing all the homework, finding out all the different quotes, comparing companies, and signing up. Coupled with automation, these consumer shifts in demand have made the process of providing life insurance policies easier on the insurers too.

Using a Broker is Better than Going to a Life Insurance Company Directly

Going to a broker has proven a smarter option than going to individual companies for many reasons. While having an effective sales staff might bode well for companies, customers are beginning to feel they are taken advantage of with pushy sales staff.

Customers don’t want to just know what one company has to offer. They want to know what all the companies have to offer so that they can make an informed decision.

A broker is a third-party individual not working directly for an insurance company and therefore statistically more likely to offer less biased information.

Trends in Life Insurance Underwriting 2018

Automation

One of the biggest complaints that customers have had about life insurance is that their underwriting process is stressful. To that end a new trend this year is to utilize automation tools.

This technology lets insurance providers keep up with the changing needs of customers without ever having to talk to their customers. The automation allows insurance companies to mitigate risk and determine what the appropriate premium would be without a lot of hand-done calculations.

Cloud Computing

Cloud computing has helped insurance companies to combat the fact that Millennials, in particular, complain about the underwriting process being time-consuming. The amount of time required for the underwriting process is a big hiccup which prevents a lot of people from getting the coverage they need.

But, insurance companies need to know about your smoking habits, family history, health status, hobbies, occupation, and medical history to determine whether or not you are eligible.

With cloud computing though, most of that information required by insurance companies is easily accessible and stored in a cloud. Integrating Cloud technology into life insurance policies helps these companies to ascertain the information they require without upsetting consumers who don’t have the patience for a lengthy underwriting process.

Accelerated Underwriting 

For companies, they can better recognize risk mitigation using public social media which includes a lot of information on hobbies and occupation, alongside things like credit scores. Credit now impact on how much you pay for life insurance.

More and more businesses are looking to credit scores to figure out whether you are a reliable customer, statistically likely to make timely payments. For this reason, and many more, continued education on money and credit is imperative. This is not just for younger kids, but for older adults looking into life insurance who may have blips on their credit report with which they are unfamiliar.

What is the Future of Life Insurance?

One thing is for sure, regardless of the future of life insurance, we will be here to help you find the best life insurance rates from some of the best life insurance providers on the market.

Give us a call today to learn more about how life insurance can help you and your family, or use our online quoting engine for fast life insurance quotes with the cheapest rates.

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About Jeff Root

is the owner of rootfin.com. He's an independent life insurance agent who has helped 1,000's of consumers purchase life insurance online and over the phone.

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