Life Insurance

As The World Turns

Global perceptions of life insurance

AM Best’s senior associate editor Lori Chordas considers the ways different cultures view the value of life insurance. Reprinted with permission. Learn more at ambest.com.

The reasons for owning life insurance, along with consumer buying behavior, vary around the world. However, nearly everyone agrees it’s an important part of personal risk management.

While some products have a distinct look and feel in different parts of the world, one product with a universal semblance is life insurance. The reasons for owning the coverage, however, along with the way consumers purchase it, can often speak a different language.

In France and parts of Asia, such as China and India, life insurance is largely seen as an essential product to supplement individuals’ retirement incomes. Citizens in Hong Kong, Japan and Singapore look to the coverage to replace the income of a wage earner, while those in the U.S. and Brazil often purchase a policy to cover financial expenses and burial costs, according to Limra.

A Vital Risk Management Tool

While perceptions about the coverage vary, something nearly everyone around the globe can agree on, amplified by COVID-19, is that life insurance is a vital part of personal risk management, said Paul Arrowsmith, president of international operations for LL Global—the parent company of Limra, Loma and Secure Retirement Institute. However, ownership of the product still remains relatively low in some areas of the world.

While perceptions about the coverage vary, something nearly everyone around the globe can agree on, amplified by COVID-19, is that life insurance is a vital part of personal risk management...

Today in the U.S. and Europe, only about half of the population owns life insurance, according to Limra’s 2020 Consumer Pulse Series study. It’s a slightly different story in the Asia Pacific region, which has among some of the highest ownership rates with three-quarters of consumers in Hong Kong, India, Taiwan and Singapore owning a policy and seven in 10 citizens in China and Thailand having made the purchase.

“We tend to see higher uptake of sales in mature markets compared to those in emerging or developing countries,” Arrowsmith said.

Culture Is Key

Culture is also key, noted Bob Pain, CEO of the Association of International Life Offices. “Some cultures need more convincing about the need for life cover; others aren’t drawn to a product where they don’t get something in return at the end of the term. But in a country like Japan, where culture is very much about honor, if citizens believe a product like life insurance is good for them then they will stick with the product and carry out paying premiums.”

In many corners of the world, the proportion of people who own a life insurance product falls below the percentage who believe they need the coverage. In India, 91% of consumers say they need life insurance but only 74% own it, and 87% of Malaysians recognize its need despite only 56% having made the purchase, Limra reports.

In nations like the U.S., South Korea and Japan, 30% of consumers prefer to research and buy life insurance online, Arrowsmith said. But in many other locales, the purchase is still predominantly made face to face with an adviser. However, he said many consumers in those nations expect online sales of life insurance to increase “by some extent” within the next five years.