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Life Insurance - US - December 2016

"The majority of American consumers currently have life insurance, but are still looking for ways to customize their current plans. Those who do not have life insurance would be hard-pressed to find a reason to apply for and purchase a policy. Marketers who can inspire consumers to focus more on the life portion of life insurance may be able to garner more excitement for a purchase that many only think about when the premiums come due."

- Jennifer White Boehm, Associate Director - Financial Services

This report will cover the following areas:

  • Expense continues to be obstacle to buying life insurance
  • Information security still a concern for consumers
  • Few features attract uninsured to buy life insurance

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Market overview
          • The issues
            • Expense continues to be obstacle to buying life insurance
              • Figure 1: Motivation to purchase life insurance, October 2016
            • Information security still a concern for consumers
              • Figure 2: Attitudes about the safety of personal information, October 2016
            • Few features attract uninsured to buy life insurance
              • Figure 3: Interest in life insurance purchase, by life insurance ownership, October 2016
            • The opportunities
              • Remind consumers that children aren’t the only ones protected by life insurance
                • Figure 4: Attitudes toward life insurance – Buying because of children, by age, October 2016
              • Policies that change over time are most interesting to consumers
                • Figure 5: Interest in life insurance purchase, flexible insurance policies, October 2016
              • In-person consultation still found to be valuable
                • Figure 6: Interest in life insurance purchase – Speaking to an agent, by life insurance ownership, October 2016
              • What it means
              • The Market – What You Need to Know

                • Life insurance industry posted a 7.3% net income increase in 2015
                  • Average life expectancy is approximately 78 years
                    • America’s elderly population continues to climb
                      • Consumers are saving more
                        • Funeral costs are rising
                        • State of the Life Insurance Market

                          • Americans purchased over $2 trillion in new life insurance in 2014
                            • Number of new individual life insurance policy purchases on the decline
                              • Figure 7: Number of individual life insurance policies purchased in the US, 2010-14
                            • Life insurance industry posted a 7.3% net income increase in 2015
                              • Figure 8: Number of life insurance companies in the US, 1995-2014
                            • Annuities are the largest life/health product line
                              • Figure 9: Direct premiums written by line, life/health insurance industry, 2013-15
                          • Market Perspective

                            • Percentage of Americans who do not have health insurance is dropping
                              • Figure 10: Percentage of Americans who are uninsured, 2004-14
                            • Consumers are saving more
                              • Figure 11: Personal saving rate [seasonally adjusted], January 2000-September 2016
                          • Market Factors

                            • Distance between median age and life expectancy impacts life insurance
                              • Figure 12: Median age of the US population, 2010-30
                              • Figure 13: Life expectancy at birth, 2004-14
                            • America’s elderly population continues to climb
                              • Figure 14: Population aged 55 or older, 2017-22
                            • The US death rate has steadily climbed since 2009
                              • Figure 15: Death rates per 100,000 people, 2004-14
                            • Heart disease, cancer continue to be the leading causes of death
                              • Figure 16: Death rates, by leading causes of death, 2004-14
                            • Funeral costs are rising
                            • Key Players – What You Need to Know

                              • DOL Fiduciary Rule
                                • Valora Life reaches out to Hispanic consumers
                                  • Life insurance startups partner with established insurers
                                  • What’s Working?

                                    • Insurers inspire consumers to buy a policy at a younger age
                                      • Figure 17: Attitudes toward the necessity of life insurance, October 2016
                                    • Life insurance tries to lighten up
                                      • New York Life’s new “Be Good at Life” campaign
                                        • Figure 18: “Be good at life” corporate branding for New York Life
                                      • Life insurance startups partner with established insurers
                                        • Ladder Financial
                                          • SoFi
                                            • Valora Life reaches the Hispanic market
                                            • What’s Struggling?

                                              • DOL Fiduciary Rule
                                                • Low interest rates
                                                  • Life insurance lags behind other insurance industries in adapting to consumer need
                                                    • Information security still a concern for consumers
                                                      • Figure 19: Attitudes about the safety of personal information, October 2016
                                                    • Few features attract uninsured to buy life insurance
                                                      • Figure 20: Interest in life insurance purchase, by life insurance ownership, October 2016
                                                  • What’s Next?

                                                    • Fed may raise interest rates
                                                      • Insurers to focus on term life policies
                                                        • Wearables, telematics to be used for underwriting
                                                          • Figure 21: Interest in trackers with incentives, January 2016
                                                        • Life insurance expands to more niche market
                                                          • Changing attitudes toward burial
                                                          • The Consumer – What You Need to Know

                                                            • Consumers consider life insurance to be necessary
                                                              • Most consumers have whole/permanent life insurance policies
                                                                • One third do not know what type of life insurance they have
                                                                  • Consumers are looking to protect their families
                                                                    • Young women could be shown the value of life insurance
                                                                    • Is Life Insurance Necessary?

                                                                      • Most consumers consider life insurance to be necessary
                                                                        • Figure 22: Attitudes toward life insurance – Necessary to purchase, October 2016
                                                                      • Necessity of life insurance may be divided by ownership (or lack thereof)
                                                                        • Life insurers will need to deal with consumer skepticism
                                                                        • Who Has Life Insurance?

                                                                          • Most consumers have whole/permanent life insurance policies
                                                                            • Figure 23: Life insurance policy type, any, October 2016
                                                                          • One third do not know what type of insurance they have
                                                                            • Figure 24: Uncertainty of life insurance policy type, all, October 2016
                                                                          • Younger consumers most unfamiliar with their life insurance policy
                                                                            • Figure 25: Uncertainty of life insurance policy type, by age, October 2016
                                                                          • For Hispanic consumers, likelihood to have life insurance increases with age and household income
                                                                            • Figure 26: Hispanic ownership of life insurance (any provider), April 2015-June 2016
                                                                            • Figure 27: Hispanic ownership of life insurance (any provider), by household income, April 2015-June 2016
                                                                          • Just less than half of the insured have between $50K-199K in coverage
                                                                            • Figure 28: Total life insurance policy coverage, October 2016
                                                                          • Insured parents more likely to have higher life insurance coverage
                                                                            • Figure 29: Total of life insurance policy coverage, by presence of children in household, October 2016
                                                                        • Why Do Consumers Buy Life Insurance?

                                                                          • Consumers are looking to protect their families
                                                                              • Figure 30: Reasons to purchase life insurance, provide for family, October 2016
                                                                            • Millennials buying insurance as they become parents
                                                                              • Figure 31: Reasons to purchase life insurance, becoming parent, by generation, October 2016
                                                                            • Consumers are looking for help with retirement/estate planning
                                                                                • Figure 32: Reasons to purchase life insurance, retirement/estate planning, October 2016
                                                                              • Life events not a large motivating factor, but are still present
                                                                                  • Figure 33: Reasons to purchase life insurance – Life events, by age, October 2016
                                                                                • Black consumers most likely to buy due to funeral expense coverage
                                                                                  • Figure 34: Reasons to purchase life insurance – Funeral expenses, by race, October 2016
                                                                              • Attitudes toward Life Insurance

                                                                                • Consumers are confident in their ability to select a policy
                                                                                  • Figure 35: Attitudes toward life insurance – Ability to select policy amount, by gender, October 2016
                                                                                • Security of personal information is a concern…
                                                                                  • Figure 36: Attitudes toward life insurance – Security concerns, October 2016
                                                                                • However, potential for saving money on the policy may outweigh concerns
                                                                                  • iGen consumers less concerned with big-name insurance
                                                                                    • Figure 37: Attitudes toward life insurance – Buying from lesser-known brand, by generation, October 2016
                                                                                  • A third of consumers think life insurance is only useful if one has children
                                                                                    • Figure 38: Attitudes toward life insurance – Buying because of children, by age, October 2016
                                                                                • Interest in Life Insurance Purchase

                                                                                  • Policies that change over time are most interesting to consumers
                                                                                    • Figure 39: Interest in life insurance purchase, flexible insurance policies, October 2016
                                                                                  • In-person consultation still found to be valuable
                                                                                    • Figure 40: Interest in life insurance purchase – Speaking to an agent, by life insurance ownership, October 2016
                                                                                  • Technology interests younger consumers
                                                                                    • Figure 41: Interest in life insurance purchase – Mobile technology, by age, October 2016
                                                                                • Features of Life Insurance

                                                                                  • Consumers still look to the insurer’s website
                                                                                    • Figure 42: Features of life insurance company technology, October 2016
                                                                                  • Calculators, comparison tools of minor interest
                                                                                    • Figure 43: Features of life insurance comparisons, October 2016
                                                                                  • Consumers not quite ready for life insurance chat bots
                                                                                    • Figure 44: Features of life insurance company – Chat bots, by age and gender, October 2016
                                                                                • Motivation to Buy Life Insurance

                                                                                  • Expense continues to be obstacle to buying life insurance
                                                                                    • Figure 45: Motivation to purchase life insurance, October 2016
                                                                                  • Young women could be shown the value of life insurance
                                                                                    • Figure 46: Motivation to purchase life insurance, by age and gender, October 2016
                                                                                  • Technological advancements won’t be a deciding factor
                                                                                    • Figure 47: Interest in life insurance purchase – Mobile technology, by insured vs uninsured, October 2016
                                                                                • Appendix – Data Sources and Abbreviations

                                                                                  • Data sources
                                                                                    • Consumer survey data
                                                                                      • Consumer qualitative research
                                                                                        • Direct marketing creative
                                                                                          • Abbreviations and terms
                                                                                            • Abbreviations
                                                                                              • Terms
                                                                                              • Appendix – Market

                                                                                                  • Figure 48: Death rates per 100,000 people, 2004-14
                                                                                              • Appendix – CHAID Analysis

                                                                                                • Methodology

                                                                                                Companies Covered

                                                                                                To learn more about the companies covered in this report please contact us.

                                                                                                Life Insurance - US - December 2016

                                                                                                £3,239.54 (Excl.Tax)