New LIMRA research sheds informative light on workplace buyers
WINDSOR, Conn., Nov. 13, 2014 — A recent LIMRA study finds that 75 percent of workplace life insurance customers belong to either Generations X or Y.
“Younger, less experienced buyers typically do not have financial advisors, so they tend to look to different information sources compared to older customers,” said Ron Neyer, assistant research director, LIMRA Distribution Research. “Workplace life insurance buyers are also more likely to be first-time customers of individual life insurance, and about a quarter have never had a general discussion with someone who represents the industry.”
While there are differences between these customers and those who buy outside of the workplace, the majority of both groups live in households with annual incomes of over $50,000.
The report, Shopping for Life Insurance: Seeking Simplicity at the Workplace, revealed workplace customers are more often single, and they don’t do a whole lot of shopping around after being presented with an option at work. In fact, 62 percent consider only one offer, and only one in six explores a third option. “For workplace buyers, the search for life insurance frequently begins and ends at work,” said Neyer. “Many rely on their employers’ expertise for carrier selection.”
Why do they buy? Like all buyers, the top reasons workplace customers purchase life insurance is to provide for family living expenses and cover burial expenses. They place added emphasis on income replacement than customers who use other distribution channels. They’re happy customers, too: more than 70 percent of workplace customers say they are comfortable with their buying process.
The adoption of electronic enrollment platforms has significantly increased at the worksite over the past 10 years. The 2014 study found that 36 percent of workplace customers apply online or via e-mail, more than any other application method. One-on-one meetings, which have traditionally been the preferred worksite approach, are less feasible today as more employees telecommute and fewer employers grant direct, in-person access to their employees.
“There are plenty of opportunities at the workplace for insurance companies to connect with today’s younger shoppers,” said Neyer. “Most workplace life sales are simply triggered by an offer to purchase an employer-sponsored plan.”
The study examined more than 2,300 recent buyers, including 650 who purchased worksite coverage. Results were weighted to match a random sample of U.S. life insurance buyers.