Good news for financial advisors: people prefer to buy life insurance coverage from a certified representative, a Munich Re survey finds.
“For the new generation, clearly, information research is done partly on the home computer, or the cellphone. In the coming years, this should become increasingly widespread,” said Cedric Thibault, director, Business Development, Individual Reinsurance at Munich Re.
Consumers ages 55 and over want to speak to a broker or agent first, regardless of the product. Younger respondents are less inclined to start gathering information by consulting a broker or agent.
In addition, the survey asked what method people prefer when buying life insurance. The respondents could select more than one choice. Over half of the sample, or 53%, want to do business with a broker or agent in person, and 17% say would conclude a purchase on the telephone.
Only 4% of respondents chose online purchasing of life insurance using a cellphone. “The information search can be done online, but for the actual purchase, the sales force is still necessary. People still need to be helped through this process,” Thibault says.
This does not mean representatives can rest on their laurels. Within the next five years, about 23% of respondents say they will be ready to buy most or all of their insurance products online. Among those ages 18-24 (26%) and 25-35 (30%), this intention is even more pronounced.
For now, a direct meeting with a representative is the preferred means to receive insurance advice. Telephone conversations are also mentioned often. Even so, other communication media should not be dismissed, Thibault says. They include issuing a quarterly e-newsletter or a link to a blog sent by text message.
Approximately 60% of Canadians say they hold life insurance. Many of them are presumably covered through a group plan, which means they did not deal with a broker or agent. A portion of the clientele is not insurable according to the current selection criteria, yet the industry should weigh the possibility of offering them products with higher premiums.
Regarding their monthly budget, respondents were asked how much they would be willing to spend on life insurance ($37.80) and critical illness insurance ($19.50). Among those ages 25-35, for both products combined, respondents are willing to pay slightly higher monthly rates ($58.60 in total, compared with $57.30 for all respondents).
What’s more, 89% of people say that they have never been offered critical illness insurance. “There is still progress to be made here,” Thibault says.
The survey also asked about the need for life insurance. How much coverage do you think you need? About 43% of respondents said they would need at least $250,000, and 51% wanted to leave at least this amount, in both insurance savings, to family members at death. In addition, 30% of respondents say that they can already bequeath $250,000 or more to their heirs.