Life insurance means different things to different people. For some, it can be a valuable addition to a diversified financial investment portfolio. For others, it simply provides a way to cover the final expenses in the event of someone’s death. So what determines consumers’ points of view? In most cases, it comes down to age.
In much the same way that many younger consumers tend to put life insurance on the back burner, they also don’t typically view it as an investment opportunity. In looking at the results from a recent Nielsen study, age was the greatest differentiator between whether consumers thought of opportunity or death when asked about insurance.
When looking more closely at why consumers purchase life insurance, younger consumers tend to have more reasons than older policyholders. For example, respondents 39 and younger have the greatest disparity for purchasing insurance, while the 65 and older group has the fewest. The oldest group is also most likely to use life insurance as a means to pay final expenses.
Some of the results from the recent survey were fairly expected, but others weren’t. For example, the older demographic indicated that its rationale for buying life insurance is changing. As we age, we accumulate wealth and belongings—assets that we traditionally have sought to protect.
The findings from Nielsen’s 2014 insurance sentiments study, however, seem to suggest the opposite. Specifically, consumers 65 and older said they hold policies—both term and whole life—that pay very little. In fact, 33% indicated survivor benefits of less than $25,000.
Since fewer older policyholders maintain policies that will provide for their loved ones after funeral expenses are covered, it’s possible that they are actually underinsured. This may highlight an opportunity for field agents to educate this group about the many other ways that insurance policies can be used. For example, they may not be aware that, when purchased as an investment product, whole life insurance builds cash value over time.
For more detail and insight, download Nielsen’s 2014 Consumer Insurance Sentiments report.
Nielsen Insurance Track is a survey conducted biennially, collecting consumer-level data on behaviors related to auto, residential, life, and other insurance coverage types. Approximately 35,000 respondents, sampled to be nationally representative, participate.
- Insurance: To Switch, or Not to Switch, Sept. 3, 2014.
- Full Coverage: Consumer Engagement Opportunities for Insurance Firms, Aug. 25, 2014