Brokerage Marketing Opportunities should bring to mind myriad possibilities, some of which are explored here either in Focus, General Interest or Monthly Commentary. Life insurance for foreign nationals, niche marketing of products domestic carriers often don’t provide, encouragement for long term care protection needs, benefits and same-sex couples, Fiduciary Rule opportunities, life insurance for HIV patients, disability income and more. The Market Update explores the worksite, both voluntary benefits and our 2017 Analysis Of Worksite LTC Insurance thanks to the great folks at Milliman, Inc. and the diligence of Claude Thau.
Though the modern day soap box certainly won’t support my weight and I lack even the most rudimentary semblance of rhythm making drum beats at best an annoyance to all within earshot (yes, I’m the concert guy who can’t stay on the clapping beat urged at least once nightly by most performers of my generation), I find no lack of causes, real and perhaps sometimes imagined, to blather about on this page. The very real need for more disability income involvement on both the carrier and producer fronts. The unstoppable maelstrom of impending long term care need and many producers’ seemingly pugilistic resistance to approach consumers about this need to persuade (beg, coerce, scare, shame, Vulcan mind-meld) them to develop a long term care plan despite the wealth of planning options for all stages of health and/or need immediacy. The idiocy of imagining that political self interest can be wrapped in sugarcoated grandstanding and defy proven health insurance industry risk-spreading practices without an astronomical cost to taxpayers. And don’t get me started on government intrusion into the life and annuity markets to line the pockets of countless bureaucratic cronies and vultures…errr…selfless servants of downtrodden plaintiffs.
With the impending arrival of September’s Life Insurance Awareness Month (LIAM) it seems fitting to focus at least one of the larger fragments of my attention on life insurance and America’s uninsured and underinsured. Credit goes to LIMRA for over 100 years of service to our industry, but specifically for their Facts About Life PDFs. LIMRA, in cooperation with Life Happens, offers Facts About Life annually to be used as a resource for LIAM.
In 2016 there were nearly 5 million more U.S. households that have life insurance coverage, compared with 2010 results, but 30 percent of households (37.5 million) remained uninsured. There were 3.1 million more households with individual life insurance than in 2010, but individual life insurance market penetration remained steady. Only 44 percent of U.S. households had individual life insurance, equal to the 50-year low set in 2010. Of those families who had no life insurance coverage, 73 percent recognized they needed life insurance and 62 percent said they would be in immediate financial trouble if a primary wage earner died.
Using their Life Insurance Needs Model, LIMRA estimates that 48 percent of households have a life insurance coverage gap of $200,000 on average, which amounts to more than $12 trillion in total market need. Sixty million families. Overall, 70 percent of all households said they would have trouble covering everyday living expenses after several months if the primary wage earner died.
Eight in 10 households who believe they need more life insurance say they don’t buy because of other financial priorities. Or they can’t afford it. But prior research shows that, on average, people estimate life insurance to cost three times what it actually does. Six in 10 say they don’t know what to buy or how much they need. One of the biggest obstacles perceived is lack of information. But here’s a truly crucial fact: More households who believe they need more life insurance say the reason they haven’t purchased is because they haven’t been approached by a financial professional.
Approximately 50 million households recognize they need more life insurance. Almost half of U.S. households say they are likely to buy life insurance in the next 12 months. More than one-third of married couples with dependent children want to speak with a financial professional about their life insurance needs. Across all age groups and income levels, insured households said they want to review their life insurance coverage annually. And, the majority of households said they were more likely to buy when advised by a trusted financial professional.
So whaddawe do? The ever increasing average age of the insurance agent indicates that “new” producers are not replacing retiring ones at the same (or a greater) rate, and yet the U.S. population continues to increase. But it occurs to me the problem is more multifaceted than just salesforce numbers. I seriously doubt that many producers refuse to help prospects who come to them for $100,000 or $250,000 face amount policies, even term insurance. But my question to you is, how diligently do you actually seek out those prospects whose initial purchases are on the low end of the commission spectrum? Let me be absolutely clear that I see no evil, or ethical conundrum, in helping high net worth families with financial plans. I happen to believe that the majority of those helped in this manner significantly benefit society through diligent philanthropy as well as legacy bequests.
But what about the future widows who represent the significant decline in life insurance coverage adequacy for U.S. households—coverage to replace the lost paychecks of a primary breadwinner—which has dropped to an average of only three years worth of normal income, far lower than most industry recommendations. Or those families with no life insurance at all. Your unique skill sets and knowledge of the industry could have an astronomical impact on their lives. And their gratitude, in time of greatest need, on yours. Please use your creativity, the contacts in your client list, and the wealth of resources available at www.lifehappens.org to find ways and time to help more of them.[SPH]
