Too few people buying policies, too few people selling them?

Life insurance has been commoditized, sales are dropping and there are fewer agents selling insurance – is this the beginning of the end?

Some believe that the days of life insurance are over. With over complicated processes involved in purchasing a policy, a decline in the number of brokers and changing investment habits, it could be that life insurance sales are in terminal decline.
A number of life insurance brokers are now opting to call themselves ‘financial advisors’ instead of pigeonholing themselves as purely selling insurance. They recognise the decline in sales and want to appear to have a wider range of services to offer and provide long-term advice rather than solely insurance policies.
So are ‘traditional’ financial planners benefiting from this trend? Apparently not -Saybrus Partners found in a study that the majority of advisors don’t discuss life insurance with their clients. Their 2012 study found that only a third of advisors were “very comfortable” recommending life insurance with nearly one in five saying they were “uncomfortable.”
This could have contributed to the decline in insurance sales. Industry research group LIMRA, found that in 1990, the average number of policies sold was 22.5 per licensed life insurance agent in Canada. This number had fallen to 7.2 per licensed life insurance agent in 2012.
While that could be because fewer insurance brokers are selling the product, it could also be a sign of the times.
Many modern-day couples now opt to marry and settle down later in life. They have children later, purchase a home later and therefore safeguard for the future later. This means that the need and desire to purchase something as ‘mature’ as life insurance seems to be a thing Millennials ignore or postpone. Many recognise that it is something that they’ll need but with the inability to make permanent life choices until a later stage, the need to insure one’s life doesn’t seem immediately pressing.
It could also be that as the cost of housing is becoming so expensive in areas across the country, many people may consider life insurance a luxury. Vancouver’s price-to-income ratio is 11.2 and Toronto’s is 8.2, according to Statistics Canada’s household income database, so life insurance may be one of those things that people just can’t (or won’t) afford.
Purchasing trends could also be playing a role. It used to be that one person purchased several policies throughout their life. However, now many people wait until they are in their 50s and 60s, perhaps when they may have a little more disposable income, and they invest in one bigger policy. Multiple people can now also be covered under one policy. That could mean that while numbers are down profit may not be.
So that bad news is, fewer policies now, for optimists? There’s going to be a rush when all the Millenials realise that it’s now or never.