Awareness and knowledge gaps are stopping would-be life insurance customers from taking out cover.
This is according to Capgemini’s World Life Insurance Report 2027 which found that while nearly half (47%) of consumers are actively considering a purchase, that this interest is not translating into sales.
Barriers to purchase
The research reveals three primary barriers to purchase. Cost is the most commonly cited barrier, with 35% of consumers viewing life insurance as too expensive or unaffordable.
Additionally, a study from global life insurance membership body LIMRA (Life Insurance Marketing and Research Association) found that younger consumers (18 to 30-year-olds) in the US overestimate the median cost of life insurance by a factor of 10 to 12, suggesting that the affordability issue is primarily a perception problem.
Relevance of cover
While 25% of consumers said life insurance is not relevant to their current life stage, 73% of insurers already offer living benefits that provide value throughout life, not just at death.
The report found that while these benefits are clearly relevant to younger consumers, they are mostly offered as riders or add-ons, which limits their visibility. Consequently, it called on insurers to change how they position and communicate these benefits to make their relevance more apparent to consumers.
Lack of transparency
While nearly a third (30%) of respondents cited a lack of clarity and transparency around coverage and policy terms as a significant obstacle, the report found this issue isn’t due to misunderstanding, but underscores the challenges of educating consumers and clearly communicating the value of life insurance, adding regulatory oversight and compliance across markets further hinder the straightforward, accessible communication that consumers seek.
It concludes that collectively, these barriers deepen awareness gaps and reinforce misconceptions and consumers who are not well versed in insurance tend to overestimate the cost and underestimate the relevance.
Counteracting misconceptions
To counteract these misperceptions and convert consumer interest into actual purchases, the report calls on the industry to turn to clearer, more relevant, and more persuasive communication, content, and education programs.
The research details the specific challenges faced by consumers – including three that are especially prevalent in consumers’ eyes.
The reports found consumers researching life insurance often struggle with the information they find: 38% felt the content is more focused on selling than educating, while 37% found it too technical or jargon-heavy. Over a third (34%) had difficulty comparing options or understanding differences between policies. As a result, more than 40% of consumers said they felt confused, uncertain, or unconvinced about life insurance, and 25% chose not to proceed with a purchase.
Similar issues in group life
But these same knowledge and confidence gaps were found in group life insurance plans.
Communications from employers or insurers were found to typically focus on logistics and transactional matters (e.g. cost, enrolment processes, how to access benefits):
Only a quarter of respondents said they received guidance on finding the right coverage for their needs, which is often the question that matters most to employees.
While more than 50% of employees feel moderately confident about their employer-provided coverage, they have never formally assessed or validated its suitability, leaving them at risk of insufficient protection and a false sense of security.
Infrequent communications
Consumers who become policyholders were found to face infrequent communication and disconnected experiences: nearly 40% of customers said they rarely or have never heard from their insurer or agent after making a purchase.
Post-purchase interactions were seen as mostly transactional (e.g., billing notices, renewal reminders). Even where carriers offered attractive features, subpar communication can prevent customers from taking advantage of them.
The research revealed the extent of this issue. Only 29% of customers were aware of flexible premium payment options. Only 22% knew about grace periods for missed premium payments or access to loans based on the cash value of their policy.
Cancelling cover
Customers who felt forgotten or overlooked after the sale will be more likely to cancel their policies.
In fact, more than a quarter of customers who surrendered their policies or let them lapse cited a lack of understanding of benefits and liquidity options as key reasons.
The report concludes poor communications and weak engagement strategies often put customer relationships at risk, triggering exits that can cause significant financial leakage for life insurers, with immense value lost at every phase of the customer lifecycle.
