Young Adults: Life Insurance Needs a Human Connection

September 2024

A decade ago, experts and leaders were convinced that selling life insurance online, directly to the consumer, would transform the industry. During that time, InsurTech start-ups and carriers invested in online platforms to make that vision a reality. Yet most of these platforms have struggled to find their footing and gain market share. In fact, since 2014, direct life insurance sales have remained steady at 6 percent of total life insurance sales.

This is problematic because the number of policies sold has not kept up with population growth, and the percentage of people saying they are insured has dropped from 63 percent in 2011 to 51 percent in 2024. This trajectory is not sustainable long term. We need to find ways to better engage and educate consumers to help them protect their financial security. Our industry needs to leverage the best uses of technology to simplify the process of buying life insurance without losing the critical human connection consumers have repeatedly signaled they want and need.

Why didn’t buying online resonate with consumers?

Life insurance is not like buying shoes on Amazon. Initially, the industry assumed that behavior of online retail consumers would be similar to those looking to buy life insurance. But we know that consumers’ biggest obstacles to buying life insurance are due to lack of knowledge/misconceptions. Just a quarter of consumers feel confident in their knowledge of life insurance. Half say they haven’t purchased life insurance because they think it’s too expensive — although 7 in 10 overestimate the actual costs. Many who are uninsured or underinsured say they don’t know what or how much they need, which often leads to procrastination.

The younger generations — Gen Z adults and Millennials — represent the largest opportunity for our industry. More than 54 million younger adults say they live with a life insurance coverage gap. Since the pandemic, consumer awareness about the risk of an untimely death and the importance of having life insurance has remained elevated. Younger adults are more likely than older generations to say they intend to buy coverage this year (47 percent versus 27 percent).

Our research suggests initially the convenience of buying online sounds attractive but, when put into practice, people think the purchase of life insurance is too important to rely on an algorithm’s recommendation. They want to speak to an expert.

That’s where financial professionals are invaluable. They can dispel misconceptions; help explain the types of products; and do a comprehensive needs analysis to determine the individual’s requirements. LIMRA research finds people who go through the process of a needs assessment feel a lot more confident in their decision. Online platforms can provide tools to help consumers get a sense of how much coverage they might need; however, it is clear that people want more human-to-human interaction with what they consider to be an important decision.

Where technology is having the greatest impact

Let’s start with online engagement through social media. Six in 10 American adults say they use social media when seeking information on financial or insurance products. When we look at Gen Z adults, the number skyrockets to 84 percent. Many young adults tell us they go to sites like Instagram, TikTok, YouTube and Facebook to find reliable information on financial or insurance products, read other people’s reviews/comments and get recommendations from friends and family. There is a lot of misinformation out there that feeds misconceptions about how affordable and accessible life insurance really is. Creating content to dispel these should be a priority for our industry.

Technology is also making the process of buying life insurance less expensive, quicker and less invasive. In 2019, just 6 in 10 carriers had or planned to implement an accelerated underwriting program. By 2021, it grew to 91 percent. Advances in technology and the use of data analytics and artificial intelligence have made this possible.

This is very appealing to consumers who are shopping for life insurance. Half of these consumers say they would be more likely to purchase coverage using accelerated underwriting. They want “fast and easy.” They want to avoid the traditional medical exams and blood and urine samples, and they believe the process is more unbiased and objective. In an immediate-gratification world, our industry needs to find ways to streamline the life insurance purchasing process. Our data shows accelerated underwriting can shorten the purchasing process from weeks or months to just days.

Again, I would point out that accelerated underwriting doesn’t eliminate the need for a financial professional; it aids the financial professional by making it easier and faster so they can serve more clients. Our research shows one of the top reasons financial professionals place life insurance business with a carrier is the ease of the sales process.

As we commemorate Life Insurance Awareness Month this September, our industry must use all the tools available — digital and human — to solve the life insurance coverage gap that exists in the U.S.  There are more than 102 million adults (including 54 million young adults) whose financial security is in the balance.