For independent agents, selling life insurance has traditionally involved more effort than other lines of business, but today the life insurance market is ripe with opportunity.
Total new annualized life premiums increased to $4.04 billion in the second quarter of 2023, 2% higher than in 2022, with the number of policies sold increasing by 4% over the same period, according to LIMRA. Overall, the global life insurance market is expected to grow from an estimated $3.92 trillion in 2022 to a projected $7.40 trillion by 2030, according to Research and Markets.
The life Insurance industry has been undergoing an evolution since the pandemic, when consumers developed a heightened awareness and concern for personal health and financial security. This evolution is continuing in the market today—and independent agents have a role to play in meeting the surge in demand.
For independent agents, selling life insurance has traditionally involved more effort than other lines of business, such as homeowners and personal auto, but, today, the life insurance market is ripe with opportunity due to demographic shifts and technological advancements.
In particular, life insurance has seen a significant increase in millennials applying for coverage since the pandemic. This group made up the largest group of life insurance shoppers in 2021, purchasing 64% of policies sold, according to a study by Policygenius.
“A combination of pent-up demand and greater awareness of personal health and mortality drove an influx of business, particularly term insurance in 2021 and early 2022," says Joe Johns, chief digital and strategy officer, Crump Life Insurance Services. “Another pandemic-influenced trend is the pace of innovation and a greater acceptance of technology to assist in underwriting and procuring life insurance."
In essence, “mortality suddenly became high on the radar of younger people who thought they were invincible and would live forever, healthily," says Fred Garfield, director of financial risk solutions, The Horton Group. “People became sharply aware of their mortality and the need to acquire life coverage because of a loss of coverage at work or through family and financial obligations."
“For the younger demographic, there was a greater need for protection-oriented life insurance products," Johns says. Carriers were able to provide this through “pandemic-era digital innovation which created a great sales opportunity in this market segment," he adds.
“It was a feeding frenzy to get your initial coverage to the younger generations, particularly because many of that generation have more of a financially conservative mindset than baby boomers or Generation X due to the circumstances of how they were raised and the social and political experiences of the world at that time," Garfield says. “I think they're going to be more prolific buyers of risk protection in general throughout their lifetimes, but COVID-19 triggered them into action like nothing else."
This awakening has opened the door for independent agents, who can facilitate a transaction “where people can get value-added advice in making planning decisions or understanding terms of policies being sold, particularly in areas of convertibility, which I think are not on most buyers' radar," Garfield explains.
An agent can ensure that they are offering the right types of products by understanding the needs of different demographics. Today “a lot more education is available to younger adults," says Aamir Chalisa, general manager, Futurity First Insurance Group. “Because education rates are now higher, even 18-year-olds are thinking about life insurance."
For those in the slightly older demographic, such as Generation Xers, "agents should begin to incorporate cash accumulation life insurance products into their solution set and part of the overall retirement plans to support the top-of-mind retirement focus that this age group has," Johns says. “There are many great products available that can provide supplemental, tax-advantaged retirement income."
Additionally, “this group witnessed a lot of death during COVID-19 and wants more life insurance in response," Chalisa says. “This has led this group to buy additional policies, including more permanent life insurance policies."
To effectively sell to different demographics, “breaking down your book into different quadrants, such as young or growing families, empty-nesters, high-income earners, retirees, and business owners, can help you focus on the different needs and solutions that are likely aligned with the different stages of life they are at," Johns says. “Use tools like a policy review or client needs analysis to profile them and uncover protection needs."
In particular, “independent agencies focused on the business market have hundreds or even thousands of potential clients," Garfield says. “I can't stress enough the importance of C-suite relationships. If you can connect with, consult with and sell to that level of the buyer, those relationships on all your lines of business become far more impregnable."
Olivia Overman is IA content editor.