Life, Revisited
by P.E. Kelley
Something happened in 2020 that caught the attention of many in the financial planning industry. As the world, its people and its industries began to realize the size and scope of the COVID-19 pandemic, and the subsequent and staggering consequences and challenges it imposed, consumers in the U.S. began to think more seriously about life insurance. In a recent survey, LIMRA identified a 29% uptick in ‘adults likely to buy life insurance’ over the next twelve months.
The study reaffirmed industry estimates that some 30 million people are underinsured and another 30 million are uninsured. It established what LIMRA is calling a ‘reawakening’ of the importance of life insurance, something that the industry has surely known all along, so in the shadow of 2020 has launched an ambitious effort to re-establish the importance of this enormous coverage-gap.
The #Help Protect Our Families campaign, a collaboration with LL Global, ACLI, Finseca, Life Happens, MDRT, NAIFA and NAILBA, looks to roll out an awareness campaign over the next twelve months that will reach into the retail and trade audiences, to reaffirm the tenets and talking points of it essential message: Life Insurance is So Very Important.
David Leveson is CEO LL Global/ LIMRA & LOMA. He spoke with us about the genesis of the #Help Protect Our Families campaign and discussed its ambition, targets and strategy going forward.
PEK: Tell us about the Help Protect Our Families initiative. What was the genesis of this campaign, and what are the key strategies involved?
DL: LIMRA has been tracking life insurance ownership since 1960. In that time, we have seen the number of Americans covered by life insurance ownership fall to 54% in 2020, the lowest level we’ve ever recorded.
Overall, we estimate that 60 million American households are uninsured or underinsured, without enough protection to fully meet their needs.
Yet at the same time, consumers’ intent to buy life insurance is at its highest level we’ve seen – 36% (compared to 14% in 2014) – so the pandemic has certainly increased awareness about the value and importance of life insurance.
For this campaign to be successful, we felt it had it be a fully coordinated effort across the industry. At a time when so many families were are in distress, this is a crucial time for our industry to focus on its primary mission: to help provide financial security for families.
LL Global partnered with ACLI, Finseca, Life Happens, MDRT, NAIFA, LIDMA and NAILBA — to launch an industry-focused campaign to create awareness and drive education about the life insurance coverage gap in the United States.
Through the Help Protect Our Families campaign, these eight associations have agreed to pool their expertise and resources to support the efforts of life insurers, distributors and financial professionals as they help Americans secure proper life insurance coverage.
PEK: At the core of this initiative, there seems to be an inherent remedial focus on insuring the premature death of a key wage-earner: What is the perception among consumers as to how long it takes before realizing a significant economic hardship?
DL: LIMRA and Life Happens did some research around the impact on families if the primary wage earner were to die prematurely and the results were sobering. Nearly half of the households (44%) said they would face financial hardship within 6 months. For 28% of households, it would be within just one month. I suspect these numbers are even worse today given the high unemployment levels experienced throughout the pandemic.
PEK: It is estimated that life insurance ownership has declined, from 63% to 54% since 2011. Do you have a good understanding as to why this is happening?
DL: The number one reason people give for not buying life insurance is that they have other financial priorities – saving for retirement, paying for medical and long-term care costs, paying down debt or paying their mortgage, paying for education. People are more worried about the expense of living rather than dying too young and leaving their families financially at risk.
The reality is life insurance is the cornerstone of any solid financial strategy and the risk of premature death can be addressed very inexpensively. Our research shows that half of consumers overestimate the cost of life insurance by as much as three times the actual cost. The reality is that a healthy 45-year-old (or younger) can properly insure his or her family with $500,000 protection for less than $1.50/day.
Consumers are also intimidated by the process — they just don’t know where to start. Our research suggests that 82% of consumers find the information they get from a financial professional is most helpful. But, there are also plenty of retailers and online platforms that offer life insurance directly to consumers.
This campaign aims to engage and inspire everyone in the industry, especially those who sell life insurance, to ensure that all Americans have enough life insurance coverage to protect their families’ financial security.
For those who sell life insurance, recent research from the Carson Group finds that only 4% of financial professionals believe all of their clients have adequate life insurance coverage. Now is the time that all financial professionals strive to address these gaps, especially given that life insurance is top of mind for so many.
PEK: What has COVID-19 done to alter or influence the perceived need to buy life insurance?
DL: Because of the pandemic, more people than ever understand the value and importance of life insurance. According to a LIMRA study, 29% of adults are more likely to buy life insurance over the next 12 months, compared with their likelihood to buy before the pandemic.
Another interesting data point—one of the largest U.S. life insurers recently shared that their company saw a 44% surge in life insurance sales in 1919, the year following the Spanish Flu pandemic. While a significant increase, perhaps not a total surprise. It’s natural for people to think about personal and financial risk following a crisis or natural disaster.
PEK: It’s been said that ‘life insurance has to be sold, not bought’ – meaning that it takes an informed advisor to effectively elevate the needs for life insurance… and then consummate its sale. Is this still true, given new technologies, and are advisors a key component of the sale?
DL: Even before the pandemic, life insurers and life insurance sales professionals were using advances in technology to better engage consumers through social media, video conferencing and improved processes like automated/accelerated underwriting, expanded use of digital tools (e-applications, e-signatures, e-notarization, and e-delivery of policy documents) to make it easier and faster for people to buy the life insurance they need.
While the direct-to-consumer market has increased meaningfully, our research shows that two thirds (66%) of those that purchased life insurance during the pandemic said they preferred to work with an advisor. We know financial professionals play an invaluable role when it comes to selling life insurance. Almost every life insurance owner surveyed (97%) said they were satisfied with the service they received when working with their financial professional.
PEK: Getting back to the Help Protect Our Families campaign, tell us about the Phase I and Phase II focus: underinsured and uninsured families?
DL: Ultimately, our goal with this campaign is to increase the number of American households that have the right amount of life insurance coverage.
In Phase I of the project, we will focus on those who already own life insurance, but don’t own enough. Today, there are 30 million households in this category.
Beginning in the summer, we will start Phase II of the project, addressing the 30 million households that don’t own life insurance at all.
PEK: It is a daunting challenge to organize and then leverage the combined influence of seven other partners. Can you tell us about how this coordination played out?
DL: Every association CEO that I contacted eagerly joined the effort. Their leadership, commitment and engagement with our collective membership set the tone for the campaign. In the 30+ years I have been in this industry, I have never seen the industry come together like this. But, it makes sense. The campaign squarely drives at our industry’s purpose at a time when so many people need our help.
The Help Protect Our Families Campaign officially launched in February with a broad awareness campaign. Beginning in March, each association will be hosting events designed to engage and help educate those in our industry about this opportunity. Events will range from CEO interviews and advisor panels to a webinar with McKinsey and best practice sessions for financial professionals. We also will continue to provide new market research and insights to help the industry better engage the families who are at risk so they get the life insurance coverage that will protect their loved ones’ financial security.
We hope that our collective efforts help change the trajectory of life insurance ownership in the United States and help ensure that more families have the right level of life insurance coverage. Losing a loved one is heartbreaking enough. Let’s make sure we all do our part to ensure that families don’t have to worry about an associated financial hardship as well.
