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Gauging the Impact of Brand on Life Insurance Product Choice

Author

Mary Lesch, Ph.D.
Research Methodology Director, Research Quality & Performance
LIMRA and LOMA
mlesch@limra.com

August 2025

The life insurance industry is a highly competitive space with more than 700 companies in the U.S. Life insurers need to work hard to stand out and establish awareness of their brand as well as a positive brand image. Barriers include consumer distrust in the insurance industry, in general, and consumer struggles to understand life insurance products, in particular. Life insurance is a low-touch product that is not purchased with any regularity, unlike many other consumer products such as groceries, clothing or electronics. The core life insurance experience consists of the initial purchase, the payment of premiums, and the possibility of submitting a future claim.

Building Trust

To grow their brand, insurers must focus their efforts on engaging consumers in meaningful interactions that build knowledge, awareness, value and trust. They do so through marketing campaigns that establish relevance and understanding with diverse market segments, guide consumers to products that best meet their needs, and provide an exceptional customer experience that evolves with their policyholders’ changing needs.

The Insights on the Consumer Decision-Making Process for Life Insurance series from LIMRA suggests these investments in developing brand reputation are paying off in terms of reductions in consumer sensitivity to price. According to the 2024 Insurance Barometer Study, consumers’ number one reason for not purchasing life insurance is that it’s too expensive.

Consumer Preferences

LIMRA asked consumers to select their most preferred life insurance product from menus of products varying in price, application/underwriting method (a proxy for ease of process), consumer star rating (a proxy for brand reputation), face amount, and personal recommendation. Impact of brand reputation on product choice was examined using a consumer 5-star rating scale (as examples, think Amazon or Google seller ratings).

However, consumers only viewed products offered by 2.5-star, 3-star, 4.5-star, and 5-star companies. A simulator modeled on consumer product choices across respondents and trials was used to predict consumer preference shares (the percentage of consumers choosing a given product from a set of products) for different product-choice scenarios.

When choosing between a product offered at a preferred price (the lowest pricing level) and a product offered at a standard price (the next higher pricing level), the price difference is about 33 percent. In this scenario, the lower-priced option is preferred by 62 percent of consumers while the higher-priced option is preferred by 38 percent of consumers.

Brand Versus Price

However, consumer preferences shift when brand reputation is also considered. By systematically varying consumer star rating and pricing level, it was found that the difference in brand reputation for a company with a 5-star consumer rating and a company with a 4.1-star rating is sufficient to overcome a 33 percent difference in price — in this scenario, consumers are just as likely to choose the higher-priced option offered by a 5-star company as they are to choose the lower-priced option offered by a 4.1-star company. A complete reversal in initial preference is achieved when a 3-star company offers the lower-priced option is offered by a 3-star company (see Figure 1).

 

Figure 1. Preference for Preferred Versus Standard Pricing by Consumer Star Rating

Base: All consumers.

Source: Insights on the Consumer Decision-Making Process for Life Insurance: Leveraging Tradeoffs to Increase Value, LIMRA, 2025.

As the price difference grows between two product offerings, so does the difference in brand reputation required to overcome it. When there is a 50 percent difference in price, with the higher-priced product offered by a 5-star company, the brand reputation of the company offering the lower-priced product must drop to 3.7 stars for the higher-priced product to be competitive.

A near-complete reversal in product preferences occurs when the star rating for the company offering the lower-priced product is reduced to 2.5 stars, while holding the star rating for the company offering the higher-priced product at 5 stars. For a price difference of about 100 percent, the 5-star company’s higher-priced offering is unlikely to gain a majority preference share unless the competitor with the lower-priced offering has a star rating of 2.9 or less.

When it comes to considering life insurance, low(er) price is generally the number one priority for consumers. However, the simulations presented here demonstrate scenarios in which price is less important — that is, when consumers trade off a lower price for a more expensive product offered by a more highly regarded brand. We found that brand reputation overcomes price differences up to about 50 percent higher, without too much difficulty — a difference of less than one star in brand reputation, 4.1 versus 5 stars, is sufficient. This return on investment is strong motivation for very good life insurance companies to work hard at becoming great companies.

Strategic Takeaways

While brand reputation is effective in counteracting price sensitivity, it is unlikely to overcome the largest price differences unless the companies offering those products fall at the extremes of the consumer star-rating scale, or it is “bundled” along with other valued product attributes, such as ease of process (see Insights on the Consumer Decision-Making Process for Life Insurance series for relevant data). While consumers are willing to pay more for products offered by a well-respected brand, care should be taken not to push the limits as to how much more consumers are willing to pay — that will only serve to damage their trust in your brand.

For those consumers not yet at the point of purchase, serve as a trusted advisor, providing education aimed at making the products and process more transparent so they have the confidence to continue their life insurance journey. When they are ready to make their purchase, your company will be top of mind.

 

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