Consumers warming up to life insurance policies at retail shops
By Kathryn Mayer
Superstores can be more than just a place to stock up on groceries and household items—they’re also a spot to buy life insurance policies.
And consumers are warming up to the idea, according to a new survey.
Nearly one in five consumers (17 percent) would be willing to purchase life insurance coverage directly from a retail outlet, according to findings from the 2013 Insurance Barometer Study, conducted by LIMRA and the LIFE Foundation.
The study asked consumers to assume they were purchasing life insurance and express their degree of willingness to buy from numerous types of retail locations, such as a warehouse club store, like Costco, or a superstore, like Wal-Mart or Target.
Big-box retail stores are increasingly offering a number of financial services, from check cashing to life insurance offerings.
Last fall, the nation's largest life insurer, MetLife, said it had begun selling life insurance cards at roughly 200 Wal-Mart stores in Georgia and South Carolina.
The one-year life insurance policies are available in color-coded boxes to mark different prices for four age groups: blue for 18-44; yellow for 45-54; green for 55-59 and red for 60-65. MetLife offers two different death benefits via the cards — $10,000 or $25,000 — and the price depends on a person's age bracket.
Though some praised the convenience of retail life insurance policies, others have criticized the idea.
For one thing, MetLife policies available at Wal-Mart expire after one year, while a life insurance policy can last as long as the policyholder is alive. Plus, coverage isn't guaranteed at checkout — it has to be approved after a potential policyholder calls a toll-free number and answers six questions about his or her health.
Nonetheless, of the 2,000 people surveyed for the Insurance Barometer Study, those who said they would buy a policy at a big retailer cited the following reasons for their interest: “reasonable cost” (63 percent), “simple process” (44 percent), “convenient” (43 percent) and “no pressure to buy” (42 percent).
While the number of consumers willing to purchase a life product through a retail shop isn’t overwhelming, it’s worth noting, says Todd Silverhart, corporate vice president and director of LIMRA Insurance Research.
“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," Silverhart says. "For carriers seeking a niche market, retail ventures could be a worthy approach.”
Originally published on BenefitsPro.com