Other parts of this series:
With the cost of life insurance at an all-time low, you’d think that policy ownership would be hitting record highs—not so say the numbers. According to a 2010 LIMRA survey, life insurance ownership in the United States was at its lowest point in 50 years, and there’s one group where this number is significantly more pronounced than the rest: the middle market.
Big opportunities in the middle
Only 44 percent of the US middle market—defined as the 52 million households with income between $35,000 and $100,000—has life insurance. Insurers with their fingers on the pulse are well aware that even small improvements in their effectiveness in this sector would yield big results. Yet, as life insurers tackle the high cost of distribution and underwriting, their focus is on the mass affluent and affluent markets, leaving the middle market underserved.
How can life insurers best reach this segment?
Most agent-driven, traditional carriers have not undertaken the top-to-bottom value chain realignment required to reach middle-market consumers efficiently and effectively. Some insurers, however, are winning in this market. Take Aflac, Torchmark and Colonial Life. These carriers have found an increasingly compelling channel for reaching middle-market consumers—the workplace. Why? Some 80 percent of employees rate the workplace as a “very important” or “somewhat important” source of personal insurance and savings products. What’s even more encouraging is that 75 percent of those who shop for life insurance in the workplace ultimately decide to buy.
Clearly, the workplace and the marketplace that’s come to be known as “voluntary benefits”—protection products bought by employees through the workplace at their expense—represent a big opportunity for life insurers, but knowing the dynamics unique to this market will be critical to achieving maximum return on investment. Join me over the next few weeks as I look at what’s on the horizon and what it will take for life insurers to win over the underserved middle market.
To learn more in the meantime, read the full report written by my colleagues Bob Sollmann and Atul Agarwal: