There’s a significant gap between life insurance policyholders’ existing coverage and what they actually need to face life events financially. LIMRA research from 2024 shows only 51% of US consumers claim they have enough life insurance.
This makes the coverage gap one of the industry’s biggest problems. Major reasons cited by experts for the growing coverage gap include:
- Insufficient consumer education in the way new generations prefer to consume it (leading to a misunderstanding of life coverage’s value)
- Outdated distribution strategies
- Clunky legacy technology that obstructs progress in product innovation
In this blog post, we’ll take a look at how life insurers got here, and how smart carriers can change course.
Origins of the Life Insurance Coverage Gap
Life Insurance’s Big Picture
That 51% figure is quite a decrease from the 63% who confirmed coverage ownership in 2011, just over a decade earlier. (This decline actually dates back far further than that, to 1971.)
It begs the question: Why such a major drop in only 13 years?
In 2024, life carriers in the US reached a new record in premium sales — close to $16 billion. However, the total number of new policies sold dropped.
Over the last decade-plus, policy sales have generally either slightly dropped, stayed stagnant, or insignificantly risen. (A spike in policies sold in 2021, following the height of the COVID-19 pandemic, represents one notable exception to the pattern.)
Why is the Life Insurance Coverage Gap Growing?
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- Consumer misconceptions: Many would-be life insurance policyholders — especially millennials and Gen Z — believe such coverage costs 2-12 times more than it does. Life products are also more complex in features and terms than the P&C policies they’re familiar with.
- Insufficient education and outreach: To correct those misconceptions, life insurers must provide relevant, digestible information. Unfortunately, they aren’t doing this effectively. Carriers tend to lean on website content or more traditional marketing methods than social media or other, more modern information distribution methods.
- Non-digital distribution: Life insurance remains overly tied to old-school, agent-based distribution models instead of digital strategies.
- Legacy tech limitations: More than insurers in other lines of business, life carriers rely on outdated IT infrastructure — much of which will soon lose vendor support. Lack of updates will exacerbate existing legacy problems that include but aren’t limited to slow time-to-market for new products, policy admin challenges, and incompatibility with third-party ecosystem partners.
The weakness of core systems connects to nearly all factors driving the coverage gap. It puts carriers in a bind they’ll only truly escape through digital transformation.
How Digital-First Core Platforms Can Help Bridge the Gap
With a digitally native core solution like EIS OneSuite™, life insurers can rapidly improve their offerings. The platform helps carriers provide policyholders with a wider range of more personalized policy options, accelerate new product development, and use omnichannel distribution options to address the needs of today’s customers.
Fast, flexible development
OneSuite provides insurers with easy-to-use drag-and-drop tooling features like Product Studio that let product teams quickly build policy variants for different demographics and coverage needs.
These tools can help insurers customize policies to address the specific needs of their different customer segments. For example, an insurer might develop lower-priced, simpler policies to cater to younger, first-time buyers. Meanwhile, carriers might target consumers at a different life stage with more comprehensive policy bundles that pair life coverage with benefits like workplace accident insurance.
Regardless of the product goal, OneSuite lets you build it. The platform’s library of reusable components means developers don’t have to create each variation from scratch, and it’s simple and quick to make updates as needed.
Event-driven outreach and personalization
Today’s customer, regardless of age, expects a high level of personalization from brands. Unfortunately, this isn’t always common with life insurers.
OneSuite helps personalize customer outreach with advanced customer data management tools (via CustomerCore™) and event-driven architecture that helps improve customer engagement. These capabilities make it easy to launch proactive campaigns centered on relevant milestones like marriage, home purchase, or childbirth.
Wide-ranging distribution
EIS OneSuite also helps address distribution challenges, providing seamless integration with robust digital channels via the platform’s 9,000+ APIs.
Insurers can now embed life coverage offers into health and wellness apps, relevant retail channels, and employers’ benefits admin platforms. Also, carriers can integrate with price comparison websites, or set up their own coverage marketplaces.
Rich digital experiences
Intuitive, mobile-ready digital portals for all user groups (customers, brokers, business partners, etc.) are simple to create.
Customers can easily look up coverage info or make midterm adjustments, while brokers and partners can monitor campaign performance with a high level of transparency.
Start Shrinking Your Own Coverage Gap
To start your journey toward a modern catalog of life products with wide-ranging distribution, contact your EIS representative or book a call.
And for a truly comprehensive look at the industry, check out our latest Life Insurance Market Overview.
