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Life Insurance Study: Are You Aware of Your Benefits?

Author

Stephen Wood
Research Director, Consumer Markets
LIMRA and LOMA
swood@limra.com

December 2024

Is it possible to own life insurance and not be aware of it? That is one of the many questions LIMRA’s 2024 Life Insurance Ownership Study seeks not only to answer, but also to quantify. The study, which has been published intermittently since 1960, has undergone several modifications in response to technological advances, consumer behaviors and societal change.

The first iterations of the Ownership Study were conducted via in-person interviews with American adults. In market research, we often say, “Back then, the interviewer would discuss the life insurance policies at the respondents’ kitchen tables with all the relevant paperwork in front of them.” The choice of policies in 1960 was quite limited, and life insurance was one of the few products that provided income protection and security for the transfer of wealth.

Life insurance was easy, and consumer research was easier.

In-person interviews were replaced with mailed surveys in the 1980s and 1990s. A decade later, emailed and online surveys replaced hard copies, and our surveys were completed on desktop computers. Around that same time, a larger percentage of Americans were receiving life insurance as a benefit of employment, 401(k) plans were replacing defined benefit retirement plans (i.e., pension plans) and retail life insurance policies became more complicated. Despite all of that, those American consumers who were surveyed for the LIMRA Ownership Study still had a good understanding of which financial products and policies they owned — and how much they were worth.

With the benefit of hindsight, industry data and expert judgment as a methodology, we can surmise when a disconnect in awareness arose among the insured, particularly those who receive it as a benefit of employment: sometime between 2010 and 2016.

There is no single factor to blame for the disconnect between estimated industry ownership rates and self-reported ownership rates. Industry estimates show an expansion of workplace benefits over those years, while consumer surveys don’t follow pace.

Smartphones became ubiquitous, and while surveys themselves adapted to the new small screen format, shorter attention spans and constant distractions are now a fact of life, making surveys more difficult to complete accurately. Furthermore, the combination of the pandemic, the rise of remote employment and improved technology has contributed to fewer in-person benefits fairs for employee benefits touchpoints. Emails can be sent, but engaging employees is simply more difficult than it used to be.

In the 2024 LIMRA BEAT Study, over a third (36 percent) of American workers admit to being unsure if they are offered or even own life insurance provided through their employer, similar to the rate of disconnect reflected in the average consumer study today.

What Does This Mean?

In 2021, LIMRA collected data from consumers with the intent of publishing our findings five years after the 2016 study. However, during the analysis portion of the study, we found that the consumers’ reporting of their own policies was too divergent from what we could glean from industry- and government-provided data.

At the time, however, we didn’t know why.

As we began thinking about changes to our methodology in 2024, we looked to the past for answers. As with previous years, consumer reported ownership rates were close to LIMRA estimates in 2004. The 2016 study's results also appeared reasonable at the time of its publishing. However, upon revisiting previous iterations and aligning methodologies, a revision of the 2016 data suggests that awareness of workplace life insurance coverage was already in decline.

In 2021, however, the disconnect between consumers and industry was all too clear. … And in 2024, the difference remains.

Figure 1. Life Insurance Coverage Through Work: Consumer Perspective Versus LIMRA Estimate

Filter the data in this chart by clicking on a color bar in the chart legend.

*Excludes self-employed workers


LIMRA’s estimate is based on other LIMRA benchmarking, carrier and consumer studies as well as industry and government data. For reporting purposes, we will be using the LIMRA estimated data.

As you can see, there are a significant number of workers who appear to be unaware of one of the most important benefits their employer provides. One would assume that most employed readers of this publication are aware of their life insurance benefit provided at work.

But do you know its value? Two times your salary? Three? Who is the carrier for that benefit? If you have an employed spouse/partner, do they have life insurance through work? How many times their salary is the benefit worth? I won’t even ask who that carrier is.

Most employees utilize their medical and dental insurance every year. Life insurance is quite different, and it is understandable that many people do not know which carrier their employer has contracted with or even the policy’s value.

What Can We Do?

The world gets more hectic and complicated every year. At the same time, carriers and human resources (HR) professionals have more tools with which to reach workers across different media. Getting one email per year to resonate with employees is no longer a viable strategy.

Multiple touchpoints throughout the year with information regarding not just life insurance, but all nonmedical benefits should become the norm. Employees appreciate the nudges, carriers increase brand awareness, and it may spur conversation regarding potential purchase of additional policies outside of work.

Now that LIMRA has quantified this awareness deficit with regards to workplace life insurance benefits, HR professionals and carriers alike should work together to make their workforce aware and appreciative of what life insurance will provide their loved ones should the need arise.

 

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