TruStage: Filling the Middle-Market Life Insurance Gap in America
Life insurance is a crucial aspect of financial planning, providing a safety net for individuals and their loved ones. In recent years, the midmarket segment has gained prominence in the life insurance industry, showcasing its scalability potential. The mid-market consumer refers to households or individuals who fall into the $50,000 to $200,000 income bracket. These consumers are usually transitioning through key life events such as buying a home, getting married or having children.
Life Insurance Demand is at an All-Time High
In the wake of the pandemic, interest in life insurance is at an all-time high, with 39% of consumers intending to buy life insurance in the next year.1 However, consumers still lack a general understanding of what life insurance is, how much it costs and how it could help provide them financial security.
According to a recent article by the Life Insurance Marketing and Research Association (LIMRA), 52% of American adults have life insurance, highlighting a large gap in unprotected consumers.1
Additionally, 41% of both insured and uninsured adults believe they could use more coverage.1
When we look at the differences between generations, there’s also a large gap that needs to be filled, particularly for younger consumers.1
- 40% of Gen Z adults own life insurance.
- 44% of Gen Z adults have reported they intend to buy life insurance in 2024.
- 48% of Millennial Americans own life insurance.
- 50% of Millennials plan to purchase life insurance coverage in 2024.
This gap in coverage for younger generations presents a great opportunity for providers to first educate consumers about the importance of life insurance and second help them find the right coverage for them.
Why More Americans Don’t Have Life Insurance
The top reason Americans don't have life insurance is due to a lack of understanding about how much or what type of coverage is needed. Fewer than one in three Gen Z and Millennial parents express a strong sense of confidence regarding their understanding of life insurance. Additionally, 40% of Gen Z parents and 29% of Millennial parents report abstaining from purchasing coverage due to uncertainties regarding the required coverage amount and the specific type of policy to choose.
The biggest misconception behind life insurance is that it’s expensive. Many people believe it’s a luxury to have, and not something that could be afforded by more.
An additional factor that plays into the lack of coverage are economic influences creating turbulent financial conditions for American adults. When households have financial strain, expenses will be cut down, and life insurance is not immune to this. Households with a lower income are less likely to buy a life insurance policy. A broker with access to multiple companies may be able to find affordable coverage for consumers with a lower budget.
How Providers can Engage with Mid-Market Consumers
As we’ve learned, there is a large gap in young adults' coverage due to a lack of education and concerns about affordability. Providers wanting to market to these younger consumers should prioritize educating young adults first. To connect and engage with these consumers, you should understand where they spend their time and how they prefer to learn about new products they’re interested in purchasing.
Gen Z and Millennials are more likely to be influenced by social media and online reviews when choosing a life insurance provider. They tend to be savvy consumers who will take the time to research companies and look for vendors offering differentiators that meet their needs.
The mid-market consumer segment in life insurance presents a huge opportunity for providers. The ability to provide accessible, customized solutions to a diverse clientele sets the stage for sustained growth in the industry. By addressing the unique needs of the mid-market segment and leveraging technological innovations, insurers can build a robust foundation for the future, helping individuals across various income levels improve their financial well-being through life insurance.
By Kevin Cummer, Director, Life Products for TruStage™
The views expressed here are those of the author(s) and do not necessarily represent the views of TruStage.
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