Wanted: Permanent Life Prospects


Northwestern Mutual, a long-standing advocate of permanent life insurance if there ever was one, has some sad news and some hopeful news about that product.

Let’s get the pain over with first: The company’s new 2014 Planning and Progress Study found that only 22 percent of Americans currently own a permanent life insurance policy. This is despite the product’s ability to deliver guaranteed growth in cash value over time, be flexible in meeting needs and be used for supplemental retirement income, the carrier points out.

This percentage is but “a fraction of the 66 percent who have savings accounts,” the study notes.

Could it be that the 22 percent finding represents a glitch? After all, LIMRA just reported that whole life insurance attracted 34 percent of individual life insurance sales in second quarter, and that this product line has demonstrated “strong consistent growth” over the past six years.

However, anomaly is unlikely. The company surveyed a lot of American adults — 2,094 of them, ages 18 and up — and it weighted the group to represent the American population. That gives credence to the results.

Besides, given the company’s well-known commitment to permanent life insurance, the carrier is likely to have bent over backwards to ensure that the numbers accurately represent the findings.

So it’s time to rub the eyes and move on. The same study has some intriguing comments about the millennial generation that represents the “hopeful news” piece of this post.

Millennials are currently ages 18 to 29. According to the study, this generation recognizes the importance of saving and investing. They also tend to be more proactive about planning than their older counterparts. In fact, the researchers described these young adults as the most disciplined generation since their grandparents. The researchers go even further by saying millennials are “even more disciplined than their grandparents.”

Specifically, 62 percent of millennials described themselves as “highly disciplined” or “disciplined” financial planners, as compared to 54 percent of adults aged 60 and older.

That disciplined orientation augurs well for the slow-but-steady approach to achieving the growth and policy values characteristic of permanent life ownership.

Speaking of slow and steady, the study found that 30 percent of the surveyed millennials said they favor “slow and steady” as their financial planning approach. (Another 30 percent said they would prefer to be more cautious but believe they have a lot of catching up to do.)

This generation appears to be teachable, or at least open to, guidance as well. For example, 68 percent told the researchers that they believe there is room for improvement in how they manage their money.

That’s another eye-rubber. It suggests that many millennials may be, or could be, amenable to insurance and financial education and advice. If they continue to display the saving-oriented traits and habits of their grandparents and if they remain open to suggestions on how to manage money, learning about permanent life might be a no-brainer for them.

This means the millennial generation could represent fertile soil for permanent life insurance education and sales.

That won’t happen overnight. Many millennials are not yet in the family-building years, and some are still struggling to find steady employment with prospects for advancement. But once their situations improve, they will likely remember their early years of struggle or the value of a dollar saved.

In announcing its survey results, Northwestern Mutual said it intends to leverage September’s Life Insurance Awareness Month to deepen awareness for permanent life insurance and how it can serve as the cornerstone of sound financial strategy.

Not surprised to hear that, especially in view of the findings related to millennials. It sounds like a plan.


Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Connect with Linda →

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