No one should have to struggle financially after the death of a loved one. And yet overwhelmingly people do. Research shows that immediately following the death of a loved one, 73% of non-life insurance policy owners and 49% of life insurance policy owners have trouble paying living expenses.One year later, household income decreases by 22%, debt increases by 30% and overall wealth erodes by 19%1. Inadequate coverage is a contributing factor to financial struggles for those with and without life insurance.
Close the life insurance gap
Inadequate life insurance is a broad market issue that can lead to financial hardship for insureds and missed opportunities for insurers. According to LIMRA research:2
- 48% of all households have a life insurance need gap equivalent to at least $60 million.
- The average life insurance need per household is $200 thousand.
- The current sales potential of the underinsured market is $12 trillion.
Understanding this gap and taking deliberate steps to close it is crucial to serving your insureds’ best interests.
Reach out when your customers need you the most
Reaching out to your insureds with the opportunity to purchase new or additional life insurance products at the right time to meet their financial needs is the first step to closing the life insurance gap. Life events, including the loss of a loved one represent an optimum time to act as a trusted advisor by helping your insureds make sure they have coverage that meets their financial needs, now and into the future. Our research shows:3
- 5% of policyowners experience a death within their network of friends and family every year.
- The industry experiences, on average, 500,000 of these events each month.
- First- or second-degree relatives account for 64% of these events.
According to another LIMRA study, 25% of all life insurance purchasers did so AFTER they experienced the death of a loved one.4
Proactive outreach provides a valuable service to your customers and also creates opportunities for business growth. To illustrate, our same research shows that with 124 million life policies in force and a 5% annual hit rate of individuals experiencing a life event, an $857 average yearly life insurance premium translates to a $5.4 billion life insurance up-sell opportunity.
How do you know when to reach out?
LexisNexis® Active Insights―Death in Network leverages technology and advanced analytics linked to multiple data sources to automatically notify the insurer when someone within a policyholder’s network passes away. This is often the time when individuals most welcome trusted counsel on how to protect their families financially through life insurance.
Knowing what’s taking place in your insureds’ lives is essential to providing the right coverage that can protect them in their time of need.
- “The Financial Impact of Premature Deaths” LIMRA, 2003.
- “Turn Up The Volume $12 Trillion Sound Opportunities.” Trends in Life Insurance Ownership Study. LIMRA, 2016.
- LexisNexis Risk Solutions Active Insights – Death in Network Analysis 2019
- “Who Buys What and Why LIMRA study: http://www.limra.com/Research/Abstracts/PDF/2017/171127-02.pdf?research_id=10737453948