The Mystery of the Life Insurance Middle Market

You’ve likely heard me mention the middle market a few times and might be wondering who exactly they are and why they are so important to the insurance industry. Over the next few weeks, I’m going to explore just that. I’ll look at who exactly the middle market is, why they need life insurance, why they don’t have it and how to sell to them.

So, what is the middle market in life insurance?

While there is no set definition for the “middle market”, it is typically defined as households or individuals who fall into the $50,000 to $200,000 income bracket. These are individuals who range in age from 25 to 45 and are usually transitioning through key life events such as buying a home, getting married or having children. They are at a point where they should be buying life insurance products to protect their family’s futures and provide economic security. Rather than older age brackets who are buying products for estate planning purposes. They often do not know much about life insurance products and some might even think they don’t even need them. Less than half of the middle market households in the United States have life insurance!

Middle market customers typically rely on dual incomes to support their households and do not have the assets to cover the loss of one partner’s income. This can have devastating effects such as having to sell their home, move neighbourhoods, uproot their children and more. The financial security of these families depends on having a life insurance policy much more than it does for a high net worth individual, but the current distribution network is overlooking them.

We’ll dive deeper into this in the next few weeks, but one of the primary reasons that the life insurance industry has neglected this market so much has been its low-value proposition when compared to acquisition costs. But, at Breathe Life we believe digital can help sell more effectively to this market and drive acquisition costs down.

Using our platform as an example, we helped one of our distribution partners cut acquisition costs by 33% making it far easier and more cost-effective to reach the middle market.

At Breathe Life, we believe that everyone should have access to the coverage they need to protect the financial future of their loved ones. The middle market in the life insurance space has been underserved by traditional distribution networks and we are seeking to change that.

And the timing is right, according to a survey performed by consulting firm McKinsey, many large incumbents are seeking cost savings through digital technologies. Cost ratios have been plummeting, largely supported by the industry’s digitization. Shrinking costs are crucial for the industry’s long-term survival, but they also make targeting the middle market much more attractive. And there’s a lot to target! The consulting firm Accenture has estimated that the gap which the industry can now start to fill represents a potential $12 trillion more in revenue.

Selling to this market could have a hugely positive impact on your bottom line, but outside of that, you would be targeting a market that truly needs your products.

Stay tuned next week as I go more in-depth into why it is so important for the middle market to have life insurance products in place.