A study released early in 2010 by LIMRA, a trade group for insurance and financial services companies, reported that ownership of individual life insurance policies in the US had hit a 50-year low. Fast forward to 2011 and the downward trend seems to be reversing. In a LIMRA survey conducted in December of 2010, a majority of life insurance executives felt the biggest growth would come from whole life sales to middle income Americans. Consumers, driven by a stagnant economy and volatile investment environment, are revisiting whole life insurance, seeking products with a risk-free guarantee of return.
The trend toward the more expensive whole life product would seem counter-intuitive at a time when money is tight for most in the middle class. But a January 2011 consumer survey by insurance giant Northwest Mutual (who reported record demand for permanent life insurance in 2010) found that “when considering different types of insurance, cost aside, 50% indicated a strong interest in whole life, while only 40% felt the same way about term.” The same survey found that Americans place “equal importance on life insurance and investment.”
Elsewhere, data from a 2010 First Command Financial Behaviors Index showed that 39% of middle-class Americans own some form of permanent life insurance (26% own whole life, 10% own universal life and 4% own variable life).Unfortunately, the same index revealed that 31% of middle class Americans have no life insurance coverage at all.
Complicated policies and distrust could be part of the problem, according to a February 2010 whitepaper, Leveraging Consumer Insights, by Boston Consulting Group. American consumers equate buying life insurance “with confusion, anxiety and fear. They find insurance-speak incomprehensible and are seldom confident of their ability to make the right choice…[and] put off insurance purchases.“
The life insurance industry, recognizing the opportunity and the problem, is responding by placing more emphasis on back-to-basic whole life insurance products, easy-to-understand marketing material that spells out benefits and risks clearly, and simplified contracts. Along with consumer demand, this trend toward simplicity and transparency is being driven by more restrictive government regulation and increased litigation.
In an uncertain economy, whole life insurance and other forms of permanent life insurance are an important part of a sound financial plan and long-term financial security. When you shop for whole life insurance online, look for quotes from highly rated, financially stable insurers – your best guarantee of a satisfactory experience.