Life insurance continues to be a product that is often underestimated by consumers, and many people that should have coverage procrastinate on purchasing it due to misinformation or other factors. It does not appear that this scenario is likely to improve in 2013, meaning that insurance marketing agencies will need to seek out new ways to promote the benefits of this product.
These projections come from the latest LOMA 2013 Life Insurance Forecast, which predicts that sales will only experience a 3 percent gain. One of the primary reasons listed for the minimal growth are low interest rates. While low rates typically represent savings opportunities for consumers in certain markets, such as mortgages, they can also depress activity in other markets where higher interest is beneficial, such as savings accounts, investments and insurance products.
"In terms of profitability, the industry will continue to be challenged by the low interest rate environment, as compressed margins will continue to present challenges and put pressure on earnings," an unnamed senior insurance executive told LOMA.
Rising costs may hinder life insurance sales
In addition to low rates, data shows that consumer costs are expected to also increase in 2013. While gas prices are expected to level out, the costs of food, housing, transportation and, in some cases, healthcare are expected to rise. Separate data reveals that one of the first costs to go when consumers are trying to make ends meet is life insurance, meaning that many households who are burdened by rising costs may cancel their policies or rethink their coverage needs.
Many Americans carry misperceptions about the true costs of life insurance, and this is particularly true with young adults. It may be helpful to engage in social media campaigns that target younger markets, namely to demonstrate that premiums for life insurance are affordable for this demographic. In addition to misunderstandings about cost, few young consumers are aware of how life insurance is also a useful retirement planning tool. Promoting the other uses of life insurance may also encourage more young and middle-aged adults to explore coverage options.
In response to low sales projections, executives said the industry will make key changes to improve the potential for more customers. This includes mergers and acquisitions, which enable corporations to obtain established products and customers quickly and efficiently. In addition, executives noted that data analytics is becoming increasingly important to life insurers in helping them target key demographics.