Life Insurance Requires New Conversations

Haven Life's second annual Q4 survey highlights a large gap in knowledge surrounding life insurance and its role in building a financially secure household.

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This year, Haven Life conducted its second annual Q4 Survey, focusing on consumer understanding of employer-sponsored life insurance, as well as consumer thoughts about discussing life insurance during the holiday season. Amid growing concerns about a recession, Haven Life found that consumers are focused on saving, with 55% of survey respondents indicating they do not want an expensive gift from their partner this year but would prefer that money be put into their savings account or their child’s 529 account.

However, despite the looming recession making consumers extra thoughtful about their finances, this year’s findings highlight a large gap in knowledge surrounding life insurance and its role in building a financially secure household. Life insurance can be an important element of feeling financially prepared in today’s economy, highlighting the necessity for coverage providers to bridge this gap.

Financially Insecure Individuals May Avoid Life Insurance Conversations

According to our survey, 30% of working individuals revealed they have only “somewhat” or “no” understanding of the life insurance benefits their company provides. This result echoes the 2022 Insurance Barometer Study by Life Insurance Marketing and Research Association (LIMRA) and Life Happens, showing that of those respondents who did not feel knowledgeable about life insurance, only 17% actually had coverage in place. Consumers who feel uncomfortable or uninformed about life insurance are likely to avoid the subject altogether, missing a crucial building block in establishing their household’s financial security. A lack of preparation by consumers is not always their fault; employers typically do not offer detailed assistance, financial advisers are not always accessible and people are simply too busy to find time to sit and weigh their options.

This is a ripe opportunity for providers to pivot from usual messaging and lead generation to instead meet consumers where they are. Performing extra legwork to find underserved consumers is especially important in a period as urgent as open enrollment, which comes frustratingly close to the holidays, where time and energy may be promised elsewhere. If individuals must decide on coverage in a short time while still focusing on their daily lives, information must be made simple and accessible.

See also: Selling the Urgency of Life Insurance

Addressing Emotional Topics Head-On Will Empower More People

The “elephant in the room” inherent to any life insurance discussion is that considering one’s own death is an emotional topic that often clouds people’s capacity to gauge what their loved ones will want or need when they’re gone. However, the 2022 Insurance Barometer found that 44% of U.S. households would feel financial insecurity within six months of their primary wage earner’s death. 

The average employee-sponsored policy payout is typically one year of salary, yet 85% of respondents to the Haven Life survey want a payout beyond that. While our survey’s largest respondent group indicated they would like three to five years of payout, nearly 20% indicated they would want 15 years or more. This reveals a serious disconnect between what consumers want from their coverage and what they would actually get.

Last year, our survey found that 75% of individuals believe they would be unable to sustain their standard of living if they were unable to work, demonstrating how important it is to have life insurance to help mitigate the loss of a person’s income should they die. Life insurance can also be used to shield loved ones from debt upon passing, to provide a down payment on a house or to leave a legacy for the next generation. 

Regardless of how it is used, a common thread resonates: Sufficient life insurance delivers peace of mind that loved ones will be protected. From employers’ perspective, reducing stress and financial concerns among their employees will always improve productivity and overall emotional satisfaction. Taking one step further to guide employees to life insurance options such as gap coverage will further cement company loyalty.

This Year’s Holiday Conversations Can Be Different Than Last Year’s 

The holidays provide an especially opportune moment for consumers to have meaningful, in-person conversations with their loved ones about their future. According to this year’s Haven Life Q4 survey, “family milestones” and “travel plans” are again the conversation topics people are most excited to have, with more than half of survey respondents placing these conversation topics at the top of their list. However, unlike last year, when “health and wellness” took the third spot, this year the pandemic is in the rear-view mirror, with 2022 respondents eager to discuss employment opportunities; “career” is cited as the third most popular topic.

The holidays are a great time to get together with family and to share love and joy. But it’s also time to have conversations around financial planning and end-of-life care. After all, thinking well is wise; planning well is wiser. As concern about the pandemic wanes, this year’s respondents also seem to have a reduced sense of urgency. Only 30% of those surveyed have spoken to their loved ones about necessary life insurance and financial planning needs in the last six months, compared with 57% of respondents in 2021. A surprising 15% of respondents have never spoken to their loved ones about this topic at all.

Nevertheless, when respondents were asked how they would feel if given a life insurance policy over the holidays, the top three responses were “surprising,” “thoughtful” and “well-intentioned” – also the top three results from 2021. With 85% of respondents to this year’s survey indicating they are “very” or “somewhat” concerned about an impending recession, consumers continue to recognize the value of planning for the future.

Spotlight on Accessibility and Simplicity

With 17% of this year’s respondents admitting they do not fully understand the difference between life insurance and health insurance, we believe it is more important than ever to provide accessible, easy-to-understand options for the majority of Americans who do not work with a financial adviser. We believe that when providers make the options simple and easy to understand, consumers can make decisions with confidence.

Wade Seward

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Wade Seward

Wade Seward is the head of distribution strategy at Haven Life, leading the strategic pursuit of partnerships that allow Haven Life to increase the accessibility of simple and affordable life insurance solutions to American households. 

With over 28 years of experience in the life insurance space, Seward provides industry-leading expertise in distribution, marketing, compliance and law.

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