It’s officially Life Insurance Awareness Month (LIAM). So now what do we do? Same ol’ same ol’? It is one of my most common battles—to think and plan differently, change an attitude or attitudes, and embrace and act on a new idea. Life Happens (sponsor of LIAM) is a non-profit organization dedicated to helping Americans take personal responsibility through the ownership of life insurance and related products, including disability and long term care insurance. LIAM is an industry-wide campaign aimed at educating Americans about the importance of life insurance and helping them get the coverage they need.
Life Happens provides a wealth of producer resources to be utilized to help inform consumers about the products our industry sells and how important they can be for protecting clients and their loved ones from financial devastation in the event of death (or disability). Further, they have access to numerous research findings to help agents refine their approach to American consumer segments either without life insurance coverage or admittedly underinsured.
One such report is the 2015 Insurance Barometer Study, available through a partnership between Life Happens and LIMRA. Access to the report can be gained via www.lifehapens.org/industry-resources/agent/barometer2015/ by entering your email address in the space indicated at the bottom of the page. Praise must be lavished on Ashley Durham, assistant research director of LIMRA for this great resource. The study features sections on consumer financial concerns, ownership and consumer outlook, sales barriers, life insurance awareness, research and purchase preferences, and sections on long term care and disability insurance.
Cited as sales barriers are perceived cost (65 percent), other financial priorities (61 percent), perceived need satisfied (55 percent), lack of trust in insurance companies (38 percent), uncertainty about how much or what type to buy (38 percent), procrastination (30 percent), not wishing to contemplate death (29 percent), not having been approached about it (22 percent) and concerns about qualifying for coverage (22 percent).
One of Life Happens’ most apparent initiatives is to combat the perception that life insurance is too expensive, which can certainly impact the first two barriers and may chip away at others. Life insurance companies and life insurance agents must combat the rest. Insufficient service to the middle market is widely believed to be the largest contributing factor to historic lows in life insurance ownership.
In his white paper In Search Of The Industry’s Holy Grail: Penetrating The Middle Market, Walter H. Zultowski, PhD, relates common beliefs regarding our industry’s role in underserving the middle market, citing such factors as the decline in the numbers of agents selling life insurance; that the industry hasn’t been successful in communicating to the middle market both the necessity of and affordability of life insurance; that the industry’s compensation system makes it difficult to earn a living exclusively serving the middle market, driving agents to the affluent and business markets; and that the industry is slow in offering new ways in which the public can access its products. Of great interest is Zultowski’s analysis of past attempts to segment the middle market and his identification and characterization of three distinct segments within the market: Opportunistic buyers (39 percent), planners (35 percent) and protectors (26 percent). His white paper can be accessed via the Society of Actuaries website www.soa.org/research/research-projects/life-insurance/research-better-understanding-middle.aspx and then clicking on the PDF under “Related Links.”
But back to the barriers to the sale and our industry’s need to address them. Widespread eroding trust in life insurance companies (and collaterally, agents) realistically can’t be traced back to an overwhelming number of first or second hand experiences with friends and relatives being screwed by insurance companies. It simply can’t. With billions of dollars in claims paid annually, millions of Americans have experience with families they care about who have been positively impacted by life insurance purchases. Many more have stories of lives tragically altered by a lack of life insurance. My personal resentful, finger-pointing places the blame on the mainstream media and a perceived liberal desire to promote an “us against them” attitude toward large financial institutions—insurance companies in particular—their customers and basically anyone with money who isn’t a leftist Hollywood celebrity. Extremely hard to fight that.
Looking at the other barriers, however, who better to communicate the need than insurance agents to those misguided as to their needs, unsure of how much and which types they need, who procrastinate on the purchase, don’t want to face their mortality, and those who feel they may not qualify for coverage? And, of course, the most glaring statistical group—those who have not been approached to buy (and the certainly much larger group approached, but poorly).
If there is a nobility in the life insurance business, as I fervently believe there is, it is in the industry’s ability to dramatically alter the course of lives affected by tragedy. Further, if life insurance agents feel they serve a divine purpose in the execution of their profession, as I certainly hope the majority do, isn’t there a responsibility to reach out to the other-than-significantly-profitable in some way? The industry is seeing movement by companies to find ways to embrace the middle market, but products suited to this market have been available for generations. I believe agents not only have a right to make a good living, but a responsibility to their own families and thus should not quit pursuing profitable business. But the path to restoring public trust in our industry in the majority of potential consumers by necessity involves approaching those prospects in the majority—the middle market. One less profitable term policy at a time.
So what’s it to be? Same ol’ same ol’? Or perhaps use Life Insurance Awareness Month as an “excuse” to commit to finding a few more middle market families to try to save from financial ruin. Find help at www.lifehappens.org. [SPH]
