Exposing Myths and Realities to Help Advisors Bring Consumers Back to the Table
Genworth Study Challenges Conventional Thinking in Life Insurance
(RICHMOND, VA) September 22, 2011 /PRNewswire/ — Studies show that life insurance coverage is at its lowest point in more than five decades.i According to the 2011 Genworth LifeJacketSM Study, 7 Key Insights to Help Close the Coverage Gap, released today, almost half of Americans with household incomes between $50,000 and $250,000 do not have life insurance and those with insurance have only enough to cover 3.6 years of income, leaving their families significantly underinsured.ii
Genworth developed the LifeJacket research project in collaboration with Dr. Gregory B. Fairchild, associate professor at the University of Virginia, Darden School of Business as part of its ongoing efforts to help financial advisors close the insurance coverage gap. According to the findings, Americans have a desire to work with an agent or advisor to understand the role of life insurance in securing their families’ futures. Additionally, 40% of consumers do not believe they have enough life insurance to meet their families’ long-term needs. The study illustrates that financial professionals should change the way they approach their client base and break down the barriers that keep families from obtaining adequate coverage.
“While the industry has done an excellent job of offering products that meet the consumer needs, we now have the deep insight needed to bridge the coverage gap and bring consumers to the table – creating a more effective way of doing business,” said Anthony Vossenberg, senior vice president, Life and Annuities at Genworth. “This study provides advisors and agents with insights needed to educate consumers about their insurance needs and motivate them to secure their financial futures.”
Agents have a clear opportunity to help consumers better understand their insurance needs and must pay attention to consumer desires. Over 60% of those who currently own life insurance said they wanted to meet with their advisor at least once a year. However, of those who desire that frequency of contact with their advisor, only 38% indicate that they are actually receiving it.
Beyond the Statistics: The “Why’s” Behind the Life Insurance Coverage Gap
“The financial plans of Americans have been challenged in recent years,” said Fairchild, who also serves as executive director of the Tayloe Murphy Center at the Darden School of Business. “The LifeJacket research has given us a deeper understanding of how consumers see life insurance within the range of financial services products. We’ve uncovered key insights that illustrate how advisors should change the way they approach selling life insurance to be more successful.”
Lag Time in Pulling the “Trigger”
Life transitions, such as marriage, purchase of a home or the birth of a child have long been recognized as important periods for reevaluation and reflection. However, the LifeJacket research revealed that the time between trigger event and actual purchase varies widely, depending on the event. There is an opportunity for financial professionals to shorten the timeframe between life transitions and purchases by reestablishing connections and providing consumers greater control in the educational process.
An Annual Check-Up Keeps the Relationship Healthy
Clients want an annual life insurance review that is fast and efficient, and those who receive one report having a stronger relationship with, and more trust in, their advisor.
- 77 percent of respondents indicated that they don’t expect a lengthy annual review – an hour or less will do.
- Those who are receiving at least an annual life insurance review (47%) have the highest level of trust in their advisor.
Policies Are Stuck in the Past
Of those who own life insurance today, one-third purchased their policies more than 10 years ago, indicating the possibility that life insurance needs may have changed dramatically for a large population of consumers since initial purchase. A simple conversation with a client can uncover unforeseen gaps in their coverage.
Go Beyond The Rule of Thumb
Consumers want deeper insight than estimating their coverage need by a multiple of their annual income. Simple online needs analysis tools can be quick and easy, allowing consumers to see a recommended amount of insurance based on their individual situation.
The Need for Needs Analysis
- 77 percent of consumers say they’ve never used an online calculator, but when shown an online example, 88% of respondents indicated they would find them helpful during a life insurance transaction.
- Age matters: 66 percent of respondents who were 35 years and younger had the greatest interest in using online calculators while 66 percent of those 55 years of age and older had greater interest in product comparisons.
Life insurance is a Journey, Not a One-Time Transaction
Clients can sometimes feel that buying enough life insurance can become an “all or nothing” proposition, when, in fact, advisors can help their clients understand that having some life insurance is better than having none.
- 77% of respondents felt that life insurance policies should be reviewed throughout their lifetime, or as their needs evolve. Only 23% felt that life insurance is a one-time transaction.
Beneficiaries: The Real Life Insurance Experts
Vossenberg added, “During the study, we had an opportunity to get behind the numbers and learn how insurance coverage has influenced financial conditions for families after the death of a primary wage earner. We gained great insight from these discussions that we can draw into our practice, specifically around the things beneficiaries wished they had known about prior to the death in the family.”
- Almost all beneficiaries in the study (94%) indicated they needed additional life insurance coverage in order to maintain their standard of living.
- 43 percent of respondents have used life insurance income to pay outstanding debts/loans, even though only 33% intended to do so. 48% indicated insurance benefits are used to pay for basic living expenses, while only 32% expected to use it for such a purpose.
About 2011 Genworth LifeJacket Study, 7 Key Insights to Help Close the Coverage Gap
Over the course of 2010 and 2011, Genworth and Dr. Gregory Fairchild of the University of Virginia’s Darden School of Business conducted a wide variety of quantitative and qualitative research studies. These studies were employed using various third party research firms (Shugoll Research, Directive Analytics, Martin Research, SIRS, Ruf Strategic Solutions, Prince Market Research, CARAVAN, a service of ORC International and MarketTools/Zoom Panel) and several different respondent bases by telephone, online and mail, in order to help answer the key research question of, “Why are so many Americans uninsured or underinsured today?”
In seeking these answers, Genworth’s customer insights team either interviewed participants or worked with outside research firms to develop, launch and interpret results for 240 participants (ages 18+) in the qualitative research and 25,445 participants (ages 18+) in the quantitative research.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 insurance holding company that is dedicated to helping people secure their financial lives, families and futures. Genworth has leadership positions in offerings that assist consumers in protecting themselves, investing for the future and planning for retirement — including life insurance, long term care insurance, financial protection coverages, and independent advisor-based wealth management — and mortgage insurance that helps consumers achieve homeownership while assisting lenders in managing their risk and capital.
Genworth has approximately 6,500 employees and operates through three segments: Retirement and Protection, U.S. Mortgage Insurance and International. Its products and services are offered through financial intermediaries, advisors, independent distributors and sales specialists. Genworth Financial, Inc., which traces its roots back to 1871, became a public company in 2004 and is headquartered in Richmond, Virginia. For more information, visit genworth.com. From time to time, Genworth Financial, Inc. releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the “Investors” section of genworth.com
i Facts about life 2010. LIMRA. Accessed on 15 June 2011 from http://www.limra.com/newscenter/pressmaterials/10FOL.pdf
ii2010 U.S. Life Insurance Study, LIMRA