By Jeremy Hewett, President and CEO, AccuQuote
Insurance protects household finances against worst-case scenarios. It is a backstop. Yet people shopping for quotes focus only on price.
This approach has a major flaw. The policies families choose often do not deliver the protection they actually need. The coverage gap only becomes apparent when a claim arrives.
How do you close it? Consumers need to reframe insurance priorities. Focus on what a policy protects, not its monthly cost. The latest LIMRA data shows why that reframing matters: younger buyers want more built into a policy, from critical illness protection to long-term care support and coverage they can adjust over time, while overestimating what that coverage costs by five to six times.
Considering Price Alone Will Not Protect Your Family
LIMRA’s latest Insurance Barometer Study provides a comprehensive overview of the state of play and reveals the statistics and insights that underpin not only the coverage gap but also the trend of families looking at insurance in a new way. While 48% of adults in the U.S. still do not own life insurance, the bigger question hangs over whether those who do are adequately covered, and analysts conclude that in many cases, there’s a shortfall. LIMRA counts 92 million adults who need coverage or need more of it, and 22 million of those already own a policy they consider insufficient, meaning they need to rethink their policy choices.
The coverage gap also operates along gender lines, with 41% of women saying they require life insurance, compared with 36% of men. In terms of what’s preventing people from closing the coverage gap themselves, 33% cite uncertainty over what type of insurance package to pick, and the same proportion says they’ve not yet had the chance to sign up for cover, even if they intend to.
Cost is another bottleneck, although a common misconception among people without insurance, or with coverage they see as inadequate, is that the right policy for their family will be prohibitive. This is particularly common among under-30s, who often estimate cover to be five to six times the real cost of a typical term policy. The coverage gap for Gen Z sits at 45%, reflecting this very issue.
In our experience at AccuQuote, families affected by the coverage gap benefit from specialist guidance to understand potential costs and how they align with coverage needs. Dispelling the misunderstandings around pricing is easier when the policy we put together for a household is tailored as opposed to generic, as it closes the gap while still delivering value as a family moves through various stages, from homeownership and childcare to eventual elder care provision.
What to Look For Beyond Price
The signs that families are changing their focus from insurance cost to the level of protection provided also appear in the LIMRA report. The organization itself makes top-level assertions about consumer demand for policies that are more feature-rich while also being simpler for ordinary people to understand, which is something of a dichotomy that providers must overcome.
Again, Gen Z appears to be driving the change here, with clear signs that members of this generation who are just starting families and getting on the property ladder care less about insurance cost and more about what features a policy includes. 78% of people in this demographic have an interest in coverage that includes protection for critical illness, which impacts income, while 76% cite the availability of support in the case of long-term care needs arising as being attractive.
Adaptability is an important facet that younger insurance customers want to see in the policies they pick, with 49% stating that they want to be able to alter the type of coverage available to them as their life circumstances shift over the years. 48% said they would prefer to be able to bolt on new coverage and benefits down the line.
Compare Quotes By Protection, Not Just Price
One reason more families are looking into what life insurance protects, rather than just the policy price, is that social media has become a place for extensive financial research and a place where millions consume this type of content. 66% of social media users surveyed by LIMRA said they watched finance content on YouTube, while 62% did the same via Facebook.
Even so, 37% of consumers are less than confident in their level of knowledge and understanding of life insurance. Providers need to address both a knowledge gap and a coverage gap going forward. The demand for financial security is strong, and younger families in particular have a strong sense of what insurance can offer in this context. When comparing quotes, shoppers should focus on gaps in coverage instead of only looking at the price.
Jeremy Hewett, President and CEO, AccuQuote. Licensed Insurance Producer, State of Illinois, license no. 7875684 (NPN 7875684), life and health lines of authority. 18 years at AccuQuote, more than 2,500 families protected, over $1.2 billion in life insurance coverage placed.
