Ten Year Analysis Reveals Decline In Life Insurance Purchases

A new report, based upon consumer financial services data collected over the past ten years, reveals that the number of consumers purchasing life insurance to fulfill their protection needs is decreasing. The report, from SRI Consulting, also exposes significant demographic and attitudinal shifts, confirming that people's views about their security, self-reliance, and personal organization will hold the key for effective marketing of financial services, especially life insurance, in the future.

The demographic analysis reflects a widening income gap between more affluent households and lower income households who are still struggling. Larry Cohen, director of SRIC's Consumer Financial Decisions group, commented that, "because income is an important driver of life insurance purchases, it's no surprise that lower income households are not purchasing individual life insurance. But we are seeing a decline in group insurance among affluent households where more women are contributing to the household income than ever before. This decline may be attributed to the shifting of values from purchasing life insurance to investing their incomes."

The 150+ page report uses comparisons of selected populations from three data sets—1986, 1994, and 1996—including a host of demographic, life insurance, attitudinal, and related variables to analyze the changes in life insurance in the past ten years.

Cohen believes the most intriguing finding comes from the trend comparison of financial attitudes. "The two largest of the eight attitudinal segments both show significant growth, yet they represent polar opposites attitudinally," he explained. "One of these groups—the Self-reliant, Organized, Financially Secure—conjures up images of the capable, sophisticated financial services user that most financial institutions believe they are targeting. The other group—the Advice Seeking, Not Organized or Financially Secure—may represent the greater opportunity. Although it tends to be younger and in earlier life stages and have more limited resources, this segment of nearly a quarter of all households has more unmet current and future financial needs. And it is more receptive to forming a long-term relationship," Cohen concluded.

The Future of Life Insurance: Industry at the Crossroads is now available from SRI Consulting. For more information about this program, contact Larry Cohen, director of Consumer Financial Decisions, SRI Consulting, by telephone: 609-734-2048, or e-mail: lcohen@sric.sarnoff.com