Modern trends on the insurance market

According to LIMRA’s 2018 Insurance Barometer Study, 60% of Americans had some type of life insurance in 2018, which is already a change for the better compared to previous years, but still, one in five Americans still think that their current life insurance policy doesn’t provide sufficient coverage. As trends shift in the insurance industry and new technologies make their influence known, client demands also start to increase and the average American no longer looks at the process of getting life insurance in the same way.

These 10 trends reveal that Americans want flexibility and simplicity when shopping for life insurance, but, at the same time, many customers still believe in some myths that prevent them from getting the coverage they need:

People prefer comparing life insurance options online

Although the vast majority of Americans end up buying from an agent face to face, 50% of them start the research process online, by comparing policies from various insurers and checking if insurance companies are reliable. Research shows that customers are more and more open towards the digital revolution and appreciate speed and convenience in every aspect of their lives, including life insurance.

Millennials overestimate the cost of life insurance

Price remains the main reason why Americans don’t invest in life insurance. However, this essential service is much less expensive than people picture it. The LIMRA study found that a whopping 80% of Americans overestimate the price of life insurance, with 40% of Millennials imagining premiums 4 times as high. The average annual cost for a policy is only $160 a year, whereas participants to the survey answered responded that premiums were between $400 and $1,000.

50% of Americans would buy life insurance if they didn’t have to pass a medical exam

After costs, the medical exam is another major reason why many people would rather not buy insurance. Traditionally, prices vary depending on the result of this exam, which half of Americans perceive as uncomfortable and intrusive. However, things are slowly starting to change and new players in the industry are changing the way premiums are offered. For some companies, this exam is still mandatory, but the practice could become obsolete in a matter of years.

3 in 4 people believe insurance policies are hard to understand

Even when money isn’t a problem, people still think that the process of getting life insurance is too complicated and that companies don’t make policies easy to understand. From the fine print to the local rules and regulations, consumers find that there are too many details that they’re simply expected to know. For example, here in Missouri, only a handful of residents know that getting life insurance in Missouri is regulated by Title 24 Chapters 375-385, or that policy holders have to provide their clients with at least a 30 days grace period. Many consumers don’t know their rights and find it even harder to shop for a policy that matches their lifestyle, which is why there are now many online guides designed for information and comparison purposes.

Only a small percentage of the people who don’t have life insurance believe they need it

This is a worrying statistic that should act as a wake-up call for both the Government and insurance companies. Only 1 in 5 people who doesn’t carry life insurance believes they need it, which calls for more extensive measures in terms of raising awareness.

Millennials understand the need for life insurance better than older generations

Interestingly, the problem above isn’t so common among Millennials, but among the older generation. For many years, Millennials were believed to be the ones at risk, but according to the latest figures, 40% of Millennials would actually prefer that their partners had better insurance. Older respondents, however, said that they would rather invest in a retirement plan or real estate, and that life insurance isn’t one of their priorities.

Recommendations from friends and family remain the deciding factor when buying life insurance

Although online comparison websites make it easier for people to look for life insurance, recommendations from friends and family still matter. Even Millennials, who are the most likely ones to embrace disruptive technologies, said that a recommendation from someone they trust tips the scales in favor of a certain company.

Two third of Americans are more likely to trust insurance companies that have a website and an active social media presence

In 2019, earning consumer trust is almost impossible without a good digital footprint. One the one hand, a professionally made website and an active presence on social media platforms facilitate customer interaction and helps people find the insurance they need more easily. On the other hand, the companies that meet these criteria are perceived as more reliable and two thirds of Americans would trust a company with an online presence.

Old school life insurers are losing ground in favor of AI-powered services

Artificial intelligence has had a major impact on many fields, bringing innovation and accessibility in industries that were once dominated by old-school practices. Life insurance is no exception. Although traditional insurers still dominate the market, AI-powered startups are gaining traction and win consumer trust by offering flexible products that are targeted to their needs. Combined with Big Data and machine learning, AI can help insurers determine an individual’s risk with more accuracy, based on a wide spectrum of factors.

Americans want insurance policies that reward healthy living

In line with AI-powered services, which are making life insurance more targeted and relevant, many innovative start-ups suggest an innovative approach: policies should include rewards for healthy living. This initiative was already tested by several start-ups, who used data from wearables to track how active their clients were. Those who engaged in exercise and had a healthy died received points which they could then redeem. Their idea has already received positive feedback, because it’s based on rewards, not punishment and, in the future, projects of this type could make Americans more open towards life insurance.