Life Insurance: Connecting with Multicultural Consumers

A 2016 study by the Life Insurance Marketing and Research Association (LIMRA), estimated that 48% of U.S. households have an average coverage gap of $200,000. This unmet life insurance need adds up to over $12 trillion in total market opportunity. So how can brands capitalize on this? We examine the roadblocks that multicultural consumers face when it comes to buying life insurance, as well as opportunities for brands to connect with them across the purchase journey – pre-purchase, purchase, and post-purchase.

A $12 trillion Opportunity

LIMRA estimates that this huge market potential continues to grow by $340 billion each year. In this study, we set out to understand how multicultural consumers think about life insurance, and the barriers and drivers to purchase. The insights uncovered will help brands to uncover ways to engage this growing market.

Different Starting Points for Multicultural Consumers

Hispanic consumers start their journey further down than other consumers. They have lower life insurance ownership rates, lack of understanding of what it is and how it works, as well as a fear around the product.

  • Marketers must begin by demystifying life insurance and educating them. Provide clarity on the process and emphasize that it’s not solely tied to death or final expenses to allay their fears.

Asian consumers are further upstream on the spectrum. While they have slightly higher life insurance ownership rates than Hispanics, they still struggle to accept that it’s a worthy investment. Our study shows that Asian consumers feel financially secure with their savings and lack of debt. Surprisingly, many consider life insurance to be a gamble, or a risky investment.

  • To move Asian consumers further upstream, marketers must focus on how life insurance can be used to grow wealth and provide for retirement through the savings and cash accumulation components.

African Americans are on the other side of the spectrum, boasting the highest life insurance penetration. Many consider it highly important despite cost concerns.

  • Marketers can capitalize on this acceptance to take the discourse further, beyond burial and final expenses. Take the time to introduce the segment to lesser known benefits of life insurance.

All Consumers Overestimate the cost of Term Insurance

A huge barrier for all consumers, but especially for the multicultural segments, is that many are greatly overestimating the actual cost of life insurance. This is especially detrimental to the Hispanic and African-American segments who cite insurance being “too expensive” as the top reason for not buying the product.

Pre-Purchase: Family is the Key motivator

Family is the motivating factor for most consumers, but it’s important to understand the key differences.

  • For Hispanics, children are top-of-mind, followed by partners when deciding to purchase life insurance.
  • For the African-American buyer, they’re thinking primarily about children, and even grandchildren.
  • Asian consumers are concerned with the well-being of their partner or spouse first.  Note that their parents also weigh heavily in decision-making process.

Pre-Purchase: Going Straight to the Source

While insurance agents play a key role during the learning stage for most consumers, not everyone turns to them first.

  • Asian consumers still prefer to rely on their own self-directed research online before turning to agents.
  • African-American consumers similarly start online, but they go directly to insurance company websites.
  • Hispanics, especially less acculturated segments, prefer to speak with insurance agents before going online.

How Can Brands Gain Traction with these Consumers?

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