Retail life insurance: Are Walmart and Costco really a threat to agents?
By Vanessa De La Rosa
Last summer, Aetna announced that it would begin selling individual health insurance policies in partnership with Costco. Last fall, MetLife began selling life insurance policies in Walmart — straight to buyers and sans advice from an insurance agent. Some people were skeptical that consumers would opt for this type of coverage; others were wary this trend might force advisors out of business. Well, it’s been a few months now. How are your potential prospects treating these off-the-shelf options?
See also: Walmart just moved your cheese
This week, LIMRA and the LIFE Foundation released the third annual Insurance Barometer Study in conjunction with their 2013 Life Insurance Conference. The study gauges consumers’ feelings about life insurance, their buying preferences and perceptions about the insurance industry. Perhaps due to the unorthodox buying options that developed last year, 2013’s study was the first to ask consumers about their interest in purchasing from nontraditional distribution channels.
Over 2,000 people were surveyed. The study found that most consumers — 85 percent — agree that life insurance is important, and 65 percent said that they personally need it. Yet, only 62 percent said they currently had life insurance. Thirty-three percent said they feel they don’t have enough life insurance, and that includes the one-quarter of respondents who currently have some type of coverage.
Researchers asked the participants to assume they were purchasing life insurance and to rate the likelihood they would buy a policy in the next 12 months. Almost half said they were slightly likely to extremely likely to purchase coverage. The study then asked the participants to express their willingness to buy from numerous types of retail locations, such as a warehouse club store like Costco or a superstore like Walmart or Target. Seventeen percent of respondents said they’d be willing to purchase from a retail outlet. That’s close to 1 in 5 reaching for store shelves instead of their phones to call you. That’s kind of a surprising number, wouldn’t you agree? Although LIMRA Insurance Research director Todd A. Silverhart feels this number is not overwhelming and eases potential advisor alarm, noting that these respondents might be a little confused:
“In light of the novelty of the concept and that few people have actually shopped for life insurance through a retail outlet, there is likely to be considerable confusion in the eyes of the consumer as to what such a purchasing experience might entail.”
The Insurance Barometer Study adds this observation:
“Consumers in the study evaluated the concept of purchasing life insurance at a retail store, which may mean they made assumptions about what it means to ‘buy life insurance’ at a superstore. This is evidenced by the fact that while one-third of consumers willing to buy at a superstore find the idea of being able to speak to someone about the product to be a benefit of the in-store purchase, 28 percent of consumers uninterested in buying at a superstore cite the inability to speak to someone a reason to not purchase at a superstore. Clearly these two groups have different thoughts on what buying life insurance at a superstore might look like.”
This doesn’t mean to rest on your laurels, though. These new distribution methods aren't going to kindly return where they came from. As is the talk of the town here on ProducersWEB, make sure you keep an eye on the perpetual industry metamorphosis. Adapt or die is an apt phrase.