Study Finds Life Insurance Buyers Prefer Flexibility and Lower Costs Over Lifetime Guarantees

A 2024 study by John Hancock and Zeldis Research Associates reveals a growing consumer preference for permanent life insurance policies offering greater flexibility and lower costs over traditional products with lifetime guarantees. Despite the industry's longstanding emphasis on no-lapse guarantees and fixed premiums, the research found that with proper education, nine out of ten consumers favored lower-cost policies with shorter guarantee periods. This preference underscores a shift in consumer priorities, emphasizing value and adaptability rather than rigid guarantees.

The study involved nearly 400 survey respondents along with in-depth interviews and focus groups, which highlighted that cost sensitivity is a key driver for life insurance purchasing decisions. Consumers responded positively to hypothetical products that offered the same death benefit at a 15% lower cost but featured guaranteed coverage only up to age 90, beyond which premiums could adjust. Once consumers understood how premium changes worked and potential market scenarios, their initial concerns diminished, with 89% choosing the flexible policy option.

Flexibility emerged as a significant advantage, allowing policyholders to adjust premium payments and coverage to suit changing life circumstances. This adaptability provided consumers with a sense of control absent in traditional life insurance products, which often felt restrictive. The findings indicate that consumers are often dissatisfied when only a single, most expensive guaranteed option is presented, signaling a need for financial professionals to offer a broader range of choices.

For insurance professionals, the study highlights the importance of clear communication and framing when discussing life insurance products. Explaining the long-term cumulative savings and how policy features function under different scenarios can greatly increase consumer comfort and acceptance of flexible products. This approach may differentiate offerings in a market where product differentiation is limited and consumer skepticism towards one-size-fits-all solutions is high.

John Hancock’s experience illustrates this market trend: after shifting from a no-lapse guarantee Universal Life product to a lower-cost universal life option in 2011, it became the top-selling UL product. Insurers and producers who incorporate this flexibility-focused messaging and education may see improved sales performance by aligning with contemporary consumer preferences. The study suggests that the insurance industry is ready to reevaluate the traditional emphasis on lifetime guarantees in favor of flexibility and cost efficiency.