Life insurance has an inclusiveness problem
What do you want to know
- June is Pride Month.
- For LGBTQ+ people interviewed by Bestow, saving for retirement is the top issue.
- One area of concern in the life insurance market is underwriting rules related to mental health.
Pride Month offers all of us, as individuals and business leaders, an opportunity to reflect on how we can better serve the LGBTQ+ community.
This is a subject that fascinates me personally and my family.
My wife is the founder and executive director of an organization that works directly with LGBTQ+ people, and we’ve seen firsthand the challenges this community faces.
For Pride Month, my company Bestow, a life insurance technology provider, conducted original research to understand the specific financial concerns of the LGBTQ+ community and use them to learn how to create better products and experiences to serve this audience. Besides being the right thing to do, as an industry we should care.
The LGBTQ+ community is going through most of the same stages that create a need for coverage, and they are actively buying life insurance.
- 64% of LGBTQ+ people with financial dependents had life insurance.
- 42% plan to buy life insurance when they buy a house, find a partner or start a family.
- Young LGBTQ+ homeowners were more likely than older LGBTQ+ homeowners to have life insurance.
- About 80% of LGBTQ+ homeowners under 30 had life insurance.
Here are three things we learned at Bestow from this data that we believe can be leveraged by the industry to better reach and serve the LGBTQ+ community, increasing their financial resilience and security.
A more inclusive underwriting
Modern underwriting approaches and distribution methods, often led by insurtech companies, unlock unique data-driven insights that allow the industry to understand who it serves well – and where it falls short.
The industry can use this information to take a more personalized and incremental approach to product design, underwriting and distribution to reach specific populations with coverage options and pricing tailored to their unique needs.
For the LGBTQ+ community, historical rules and underwriting approaches to mental health could make coverage inaccessible or unaffordable.
For example, although our survey did not ask respondents about mental health treatment, the cost of health care in general was a top concern for almost 70% of respondents.
A study published in the National Library of Medicine found that LGBTQ+ people used mental health services at 2.5 times higher rates than heterosexual or cisgender people.
In addition, studies found that they are two and a half times more likely to suffer from depression, anxiety and substance abuse – all of which are considered in the life insurance underwriting process.
Given that many members of the LGBTQ+ community struggle with mental health issues, we need to find better ways to understand the situation and assess risk holistically.
For example, research shows that having a supportive community makes a big difference in the mental health of LGBTQ+ people.
We should ask follow-up questions in the application process that probe the treatment, acknowledge the consistency of medication and therapy, and ultimately the support system around the applicant.
Increase and leverage living benefits
A life insurance product is very different from other products purchased by consumers.
As an insured, you have coverage, pay premiums for decades, and hope to never use the product you purchased.
For many term products, you never see any benefit from coverage, other than the peace of mind that your family has a financial safety net.
As we have seen in recent years, there is a huge opportunity to provide consumers with living benefits to their life insurance policies.
Benefits can not only increase retention, but also contribute to brand equity.
Bestow’s research has highlighted a few key areas where combining the benefits of living with coverage, or at least identifying these use cases to explain the benefits of cash value accumulation, could be particularly helpful to the within the LGBTQ+ community and make life insurance products more relevant.
Nearly 80% of LGBTQ+ respondents say they are concerned about medical costs.
In particular, medical costs associated with mental health, preventive medicine, treatment and medication for chronic conditions.
There is a huge opportunity to examine how these medical conditions affect eligibility and access and use this to inform policy design.
We can also look at how these offer a unique opportunity for living benefits, such as mental health support at no cost to policyholders.
Family planning can be a complex and expensive process for LGBTQ+ people.