According to LIMRA’s 2016 Life Insurance Ownership Study, financial
advisers should consider offering clients an annual review of life insurance
needs and strategies.
While the actual sale and service of life insurance may not seem appealing or practical to some advisers, they can still play an important role. Some 40% of investors say they are
fundamentally interested in life insurance products—and many are interested in
speaking with wealth advisers about how to use them properly.
Based on LIMRA’s Life Insurance Needs Model, 48% of U.S.
households have a life insurance coverage gap below what is
considered optimal—$200,000 on average.
“Among households with children under 18, four in 10 say
they would be in immediate financial trouble if a primary wage earner died
today,” the research explains. “Another three in 10 would have trouble keeping
up with basic living expenses after several months. But across all ages under
65, the income replacement rate (number of years covered) has declined since
Against this backdrop the role for advisers to play is
clear, LIMRA suggests.
“This is an opportunity for financial professionals to reach
out to their clients and engage with new prospects,” researchers suggest. “LIMRA’s
research shows that the majority of households (56%) said they were more likely
to buy when advised by a trusted financial professional. And more than
one-third (35%) of married couples with dependent children want to speak with a
financial professional about their life insurance needs.”
The data shows six in 10 say they don’t know what to buy or
how much they need; one of the biggest obstacles to purchasing is a lack of
“More than a third of U.S. households who believe they need
more life insurance say they haven’t purchased because they haven’t been
approached by a financial professional,” LIMRA finds.
There is also the impending Department of Labor (DOL) fiduciary
rule reform to consider, which could
impact the balance of assets directed to annuities, life insurance and
other investment product silos. In addition, observers have suggested the nature
of the new fiduciary rule could create an environment in which more
holistic wealth planning is promoted, potentially giving a boost to life
The full LIMRA analysis is available here.