Life insurance agents who focus on high net worth clients are ignoring a huge, underinsured and underserved demographic in middle-market consumers.
A recent LIMRA study found only 46 percent of middle-market consumers own individual life insurance and more than 25 percent of them possess no life insurance coverage at all, individual or group.
The study identified 56 million middle-market households in the U.S., defined as consumers ages 25-64 with annual household incomes of $35,000 to $99,999.
Job Market, Employment Trends Contribute to Coverage Gap
Many consumers with fulltime jobs and benefit packages receive baseline group life coverage but it usually falls far short of recommended amounts in the case of a primary earner’s death, providing only enough for burial expenses, emergency costs and some immediate bills. Options to buy additional coverage through workplace group policies often are not used.
Compounding the gap, group coverage isn’t portable. That exposes scores of workers who, voluntarily or otherwise, opt for self-employment as part of the surging “freelance nation.”
Among those who do have individual life policies, the mean face amount is about $250,000, or 3.6 times annual household income. Industry experts recommend people carry 7 to 10 times annual household income.
Middle Market Unprepared, In Need of Information
The majority of middle-market consumers say they are not financially prepared for the death of a family member. They want more information, simple products and an advisor who will take the time to listen to their needs and educate them about their options, LIMRA found.
Additionally, 6 of 10 such consumers know they need life insurance coverage and are willing to buy but don’t follow through. That’s good news for Life and Health agents who want to reach out to the middle market.
“Life insurance is the one product that can help families keep a roof over their heads, provide for basic living expenses and allow time to recover and heal from the loss of a loved one,” said Robert Kerzner, president and CEO of LIMRA, LOMA and LL Global, when the study was released in September. “LIMRA’s research shows that people do not fully understand the risks they take by not having adequate life insurance coverage.”
Improving penetration among the middle market demographic is important for the growth vitality of the life insurance industry. But it also may be the key to expanding your own business.