Consumers understand life insurance

Life insurance plays an important role in providing for loved ones and dependents when a policyholder dies, allowing them to have some financial security. A new study from Corebridge Financial examines how consumers view and use life insurance, finding that while many understand the basics of life insurance, about 50 percent don’t have coverage and another 9 percent don’t even know they have it. Women (53%) were more likely than men (45%) not to have coverage, and 11% of women and 7% of men said they did not know if they had coverage.

In a written interview with Digital Insurance, Tim Heslin, president of life insurance at Corebridge, shared some insights from the survey. “Our new Corebridge Financial Life Insights & Awareness Survey reveals quite a bit about where Americans understand life insurance and where there is more to learn. By far the biggest misperception about life insurance is cost,” says Heslin.

“What’s particularly interesting is that while the lowest point of understanding was around cost, it was also the strongest point of knowledge. Moreover, cost appears as another important extreme in our research; cost is cited as the number one reason Americans have yet to purchase life insurance, at a rate more than double that of the next selected reason Although there are some strong misperceptions regarding cost, we see this as an opportunity real for our industry to educate consumers about how affordable life insurance can be.

He compares the cost of a term life insurance policy for $250,000 in coverage for a healthy 30-year-old to about the same amount he would spend monthly on a streaming service, about $15 a month. “However, 16% of our survey respondents thought the cost would be more than double the price, and another 16% thought it would be more than triple.”

Heslin says this cost difference provides “a great opportunity to help customers understand that life insurance is more affordable than they might think.”

The survey found that most respondents (80%) understood that the cheapest time to buy life insurance was when they were young and healthy. Seventy-two percent also knew that some term policies can be converted to permanent life insurance before the end of the policy, and the same percentage knew that life insurance can actually provide benefits while the insured is still alive.

The role of technology in life insurance
As many aspects of insurance evolve with the increased use of technology, life insurance benefits in multiple ways from this adoption. “Technology creates more flexibility in the application process, both for clients and their financial professionals,” says Heslin, citing the benefits of the company’s end-to-end application platform.

“For Gen Z and Millennials, a self-completed health questionnaire might be the way to go so they can complete their application when and where they want. However, many in these generations may prefer to sit down with an expert to go over the details of their application and discuss how their life insurance policy fits into their overall financial plan. When technology delivers ease of use, efficiency and intuitive design, it’s a win-win for everyone,” he says.

While technology can speed up various aspects of the life insurance process, its success really depends on its adoption by policyholders, and younger customers seem to be particularly willing to use technology to speed up the process. “We believe that younger generations are looking for quick answers and quick results,” explains Heslin. “For their entire lives, Gen Z and Millennials have been able to get product information on demand. We see the same “need for speed” in our research — 46% of millennials and 40% of Gen 0s say that if they could find out they could get life insurance within 24 hours of submitting information online, then that would be an incentive to to purchase a policy.”

Heslin shares that in some cases, automating the life insurance process can allow an applicant using an online portal to be issued a policy almost as soon as they complete the application process, greatly reducing the time previously required for policies.

As the insurance industry continues to expand its use of technology, one important aspect stands out for Heslin. “While I am very excited about how our industry is seizing new opportunities through technology, my first thought goes to something more fundamental. Those of us who work in life insurance should always remember the incredible difference we can make in people’s lives. Through our products and the protection they provide, Americans can have peace of mind that no matter what, their loved ones will be financially taken care of. The importance of this security is hard to underestimate.”

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