Thursday, March 28, 2024

What Your Clients Think They Know About Their Life Insurance—But Don’t

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Haven Life

Survey Reveals Consumer Confusion and Unrealistic Expectations

Every year it seems like prospective clients are becoming a little more difficult to reach and a little less accessible as they choose instead to rely on online resources, “experts” and digital tools that are available with one keyboard stroke.

Nevertheless, an advantage that you will always have as a financial professional is your understanding of human nature. Whether it’s a client whom you’ve been with for years or a new client you’re still getting to know, there is no replacement for your one-on-one relationships that demonstrate your expertise and care. This is especially true when you are discussing a complicated topic like life insurance where consumers often have faulty information and/or assumptions about their own benefits and needs.

If you are thinking this is rarely the case, think again. In a recent survey from Haven Life, one in three working adults admitted that they did not have a good level of understanding about their own employer-sponsored life insurance options.

As a financial professional, you have the opportunity to provide guidance and education to clients who are not receiving it at their workplace or other sources. You also have the human insight to realize people are often reluctant to admit they need help, especially when it is a topic that they may already feel they are supposed to understand.

Consumers Often Don’t Know…What They Don’t Know
Only recently has financial literacy and education gained attention as a subject that should be taught in high schools and alongside traditional college courses. Trendy words like “adulting” try to nudge consumers to proactively address their own knowledge gaps but without identifying objectives and resources. This was clearly illustrated in the following survey results from employed adults:

  • 29 percent of respondents indicated they had “somewhat” or “no” understanding of the life insurance benefits their company provides.
  • Similarly, 31 percent of respondents have “somewhat” or “no” understanding of their company’s health insurance benefits.
  • 17 percent of respondents indicated they have only “somewhat” or “no” understanding of the difference between life insurance and health insurance benefits.
  • Nearly 20 percent of respondents admit they don’t know if their company even offers life insurance benefits.
  • Nearly 30 percent of respondents said the only reason they understood the difference between life and health insurance is because a human resources colleague or financial planner explained it to them.

Survey Results Reveal Coverage Expectations Aren’t Aligned with Reality:
For clients who know they are eligible for life insurance benefits through work, additional questions arise about what these benefits entail. Our survey reveals a startling disconnect between the payout employees would receive and the payout they think they would need:

  • 77 percent of respondents would like a life insurance payout of three or more years’ worth of their salary.
    • 25 percent seek a payout of three to five years’ worth of their salary.
    • 17 percent seek a payout of six to eight years’ worth of their salary.
    • 35 percent seek a payout of nine or more years’ worth of their salary.

Yet, as you already well know, the standard employee-sponsored life insurance payout is one year. Considering that most Americans only have enough savings for one year, this leaves an overwhelming gap to fill in the event of a death. While this is not new information to you, this alarming insight provides the perfect opening to probe expectations with prospective clients and build further trust. Together, you can show them what the life insurance payout would be and compare that number to what they would like it to be, leading to a discussion of how they can supplement their employer-sponsored benefits with additional life insurance coverage.

Trust and Professional Reliability Will Overcome Lack of Knowledge and General Mistrust
You may have noticed that, as human beings, what we say and what we do don’t always match up. Because humans are creatures of interesting and odd habits, respondents said things like:

  • 36 percent would prefer to stash their money under the mattress.
  • 18 percent said at the time of the survey that they would transfer all their money into Bitcoin.
  • 11 percent find themselves called to the latest series of celebrity endorsed NFTs.

Despite these alternative routes that dominate headlines and social media, the focus for the average American is trust and reliability, something only a company with a long, trustworthy legacy can provide alongside an experienced financial advisor.

An overwhelming 85 percent of respondents indicated concern for an impending recession and the majority said they could not pay off all their household’s debt at this moment. The importance of reliability in uncertain times cannot be overstated.

We found that most respondents would trust building long term savings with a life insurance agency backed by a company with a history of longevity, financial stability, and brand reputation. Reliability is crucial in a lasting client relationship as you help your client build financial security that will hopefully span generations.

How Can You Use This Information to More Deeply Engage Prospects and Clients?
Let’s face it, it’s a lot easier for someone to admit they don’t understand their work benefits on an anonymous survey versus saying that out loud across from a financial expert. None of us enjoy admitting we don’t know something that everyone else seems to have a handle on and these survey results are an actionable way to start a conversation without putting your client on the spot.

Leveraging this survey in a conversational way can be a strategic conversation starter. These findings provide a bridge to outline areas that can be confusing and let you explore your client’s benefits in more detail. Specifically, given this information you may consider:

  • Automating a to-do on your calendar to start reaching out to clients in September and October before most open enrollment periods begin.
  • Set yourself apart by creating a deeper learning environment for prospective clients—consider enlisting a Human Resources benefits specialist in the early autumn timeframe and hosting a workshop that explains the most common options for employee benefits.
  • Establish office hours during open enrollment season where you specifically discuss your client’s life insurance benefit options and guide them in their benefit election decision-making.
  • Use this time of year as an opportunity to open a deeper discussion about the gap between what their expectations are for their family if something were to happen to them and what their reality is; this is a perfect bridge to discuss other options to shore up that gap.
  • Ask your clients what percent of their salary they think is fair to spend on life and health insurance benefits so that you can get a baseline for where they are at (40 percent of survey respondents said that less than 10 percent of their salary is a fair amount).
  • Rely on the survey to show prospective clients and clients that they are not alone.

There are many points in your client’s life journey, but at all points your client seeks financial security for themselves, their loved ones, and possibly generations to come. Today’s consumer has access to more tools, information, and education than ever in our history yet, as human beings with busy lives and competing priorities, they still falter in areas that can be most daunting like financial literacy.

Knowing where your clients’ knowledge gaps often lie is the first step. Leveraging the Haven Life survey findings or similar digestible data shows them they are not alone and helps open the door for discussion without risk of embarrassing your clients or making them feel judged. Being able to tailor your strategy to every client’s needs will improve your leads, sales, and deep, generational connection to each of your client’s unique life stories.

For more information about the survey, or how to purchase a term life insurance policy, visit https://havenlife.com/.

Haven Life conducted a quantitative survey in October, 2022, and collected 1,089 completed responses. Respondents were between the ages of 18 and 65 and identified as either full-time or part-time employees with a minimum household income of $50,000. 49 percent of respondents were male and 51 percent were female.

Haven Life Insurance Agency, LLC (Haven Life) is re-thinking how people financially protect the ones they love. Haven Life is committed to delivering exceptional products, delightful purchasing experiences, and meaningful moments of service to the modern life insurance customer.

Recent Study Reveals Consumers Are Underprepared For A Long Term Care Event

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OneAmerica® Long Term Care Survey Shares Consumers’ Perspective

The pandemic brought consumer awareness about the need for life insurance, but it didn’t have the same impact on long-term care planning, according to new research from a 2022 OneAmerica consumer study on long-term care. Only 15 percent say the pandemic has been highly influential on their perceptions of needing long-term care, the array of personal assistance, and services people need over an extended time period because of a chronic illness or disability.

OneAmerica collaborated with Hanover Research to survey more than 1,000 consumers about their perceptions and behaviors related to long-term care (LTC) planning. The LTC survey identified consumers’ comprehension and perspectives of cost, preparation and confidence to implement an LTC plan, as well as their preference of asset-based long-term care protection, and who influences their decisions on LTC. The survey results from OneAmerica signify that LTC is not top of mind for most consumers. This finding proves even more important considering November is National Long-Term Care Awareness Month.

A vast majority of consumers haven’t researched LTC protection options, despite the high probability they will need it.

According to The Administration for Community Living, it is estimated that almost 70 percent of individuals1 over the age of 65 will require a form of long-term care services at some point in their lives. However, the recent survey from OneAmerica shows that few consumers have an LTC plan in place, and only 16 percent have implemented a plan for LTC. Although 84 percent of consumers express at least slight confidence in their LTC plan, only 29 percent have researched options around LTC.

Less than half of those surveyed have worked with a financial professional on a retirement strategy. Of those who have, LTC remains a low priority compared to personal saving and debt elimination. Most consumers are unsure of their likelihood of ever needing LTC, and so they have not taken appropriate action to prepare.

“The results from this study make it clear that consumers need the help of the financial services industry to better understand long-term care,” said Jeff Levin, vice president and head of distribution of Care Solutions at OneAmerica. “Consumers have misconceptions of long-term care that financial services professionals are uniquely positioned to address to help them be protected and prepared.”

Consumers have various financial factors and product offerings to consider, along with people who influence their decisions.
Most consumers consider the cost of LTC to be a barrier, but they may not properly assess how not having LTC protection could impact their long-term financial strategy. With 53 percent of consumers citing cost as the most prevalent barrier to purchasing it and 34 percent being unsure if they would use it, consumers are prioritizing other financial goals. Consumers place the highest importance on saving enough money for retirement (86%), eliminating debt (74 percent), and having sufficient emergency funds (68 percent). While these are important goals, putting off the purchase of LTC protection can be costly because premiums increase. In addition, people run the risk of becoming uninsurable.

Although consumers are slow to implement a plan, they tend to be attracted to the features LTC provides. They are particularly drawn to asset-based long-term care protection, which features paying a benefit, even if care is not needed. Of the 25 percent who were familiar with asset-based LTC protection, consumers preferred its benefits over traditional LTC because of premiums not increasing (94 percent), the tax-free benefits (92 percent), unchanging benefits (90 percent), and the option to pass it on to their family (84 percent).

“Consumers who are familiar with asset-based LTC protection recognize its advantages,” said Levin. “The protection offers valuable benefits whether it is ever needed, and it’s an effective means of creating greater efficiency, while maintaining access and control of money and care.”

The survey results also pointed to family as highly influential in people’s decisions around LTC. Consumers revealed they trust family members the most, and 52 percent rely on a family or friend’s experience as a source of familiarity. Following family members, consumers most trust financial services professional (40 percent) and doctors (39 percent). The top motivation to purchase LTC insurance is removing the financial burden from one’s family (66 percent), reinforcing the influence of family on LTC decisions.

Learn more about how consumers view long-term care and download the full consumer research survey.

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1 “How Much Care Will You Need?” 2/18/2020. https://acl.gov/ltc/basic-needs/how-much-care-will-you-need

Methodology

The OneAmerica Long-Term Care Consumer Market Study was administered in association with Hanover Research and distributed online to professionals recruited via a third-party panel provider. This analysis includes 978 respondents, following data cleaning and quality control. Respondents were at least 40 years old and currently planning for the “retirement era” of their life. Individuals, or anyone in their immediate family, did not work in the insurance industry. Hanover Research is not an affiliate of the companies of OneAmerica.

About OneAmerica®

A national provider of insurance and financial services for more than 140 years, the companies of OneAmerica help customers build and protect their financial futures. OneAmerica offers a variety of products and services to serve the financial needs of their policyholders and customers. These products include retirement plan products and recordkeeping services, individual life insurance, annuities, asset-based long-term care solutions and employee benefit plan products. Products are issued and underwritten by the companies of OneAmerica and distributed through a nationwide network of employees, agents, brokers and other sources who are committed to providing value to our customers. To learn more about our products, services and the companies of OneAmerica, visit oneamerica.com/about-us/companies-of-oneamerica.

OneAmerica is the marketing name for the companies of OneAmerica.

The To-Do List I Didn’t Plan On: An Insurance Professional’s Caregiving Story

I’m a to-do list kind of person.

I get up every Saturday, make breakfast, then sit down and start my weekend’s to-do list. Laundry, grocery shopping, cleaning the house, yardwork, going to my kids’ sporting events, helping my kids with their homework-there are some days the list seems never-ending.

Usually not all items get a checkmark by the end of the weekend, and you can definitely hear the groan from my husband when he sees it. But I like the process, as it somehow calms me and prepares me to take on whatever comes my way.

So when my mother’s memory started to slip five years ago, the first thing I did was make a to-do list.

At first my list wasn’t very long. My parents lived 2,000 miles away in Oregon, so my involvement was limited to reminders and checking in.

But over time my family started to struggle. My younger brother was the only one who lived close to our parents, and he couldn’t keep up with the changes. My parents didn’t want me or my siblings to worry so they made light of the situation. They came up with excuses (it’s just part of getting old) or covered things up (she’s only fallen once, it’s not a big deal). And doctors were reluctant to give a diagnosis, attributing her memory loss to a concussion she sustained over a year before.

As my mom’s health began declining my lists were getting longer and more detailed, and it was becoming harder to help from afar.

When I was young and my grandparents started to need care, it tore our extended family apart. Though my aunts and uncles were spread across the country, they all wanted to participate in every care decision with my parents. There were arguments over money and living situations, there was blame, a reluctance to understand the severity of the condition, and there was anger.

It was then, when they were still healthy, that my parents made a promise to me, my sister and brother…when the time came, our family was going to do it differently.

Eventually, as my mother’s condition slowly deteriorated, that time came. Together we decided it was time to move my parents closer to me and my family in Minnesota. And who better to coordinate the effort?

So I did what I do best, I started a list-moving companies and boxes (so many boxes), car transportation and suv shipping services so we could keep our vehicles, shipping, packing schedules, airline flights, donation services, selling the home, and transferring my parents’ medical and financial information.. There was a lot to get organized.

Six months later, after several trips to help pack and organize, they arrived at their new independent living apartment in Minnesota just in time for my kids’ 2016 school Christmas program.

I remember being relieved; we had made it! Now we would have time. Time for kids’ sports games, school musicals, family holidays, planning their 50th wedding anniversary (more lists), and (finally) free babysitting!

But, in February 2017, my mom’s new neurologist delivered a diagnosis…the one we had known in our hearts all along: Mom has Alzheimer’s Disease. In fact, she was entering the advanced stage.

We didn’t have time.

In the spring, shortly after her diagnosis, mom started having frequent falls and could no longer walk long distances. By summer, she stopped walking altogether. By fall, we moved my parents into an assisted living apartment. My mother could barely eat and had lost much of her speech, speaking no more than one word at a time. By winter, we made their final move-my mother to a memory care center and my father into my home.

Through all of this, and too many tears to count, I knew what had to be done. I took a deep breath and started my to-do list:

  • Schedule doctor appointments, take parents to appointments.
  • Fill prescriptions, organize prescriptions, verify prescriptions.
  • Organize their mail.
  • Balance their checkbook, coordinate taxes, pay bills.
  • Order and deliver medical supplies.
  • Grocery shop.
  • Manage care plans.
  • Buy a walker, wheelchair and shower chair.
  • Become decision maker for the household.
  • Become primary communication point for, well, everyone.

Before my mom got sick I knew my role: I was a successful, married, full-time working mom of two young children who, with the help of to-do lists, balanced it all! But it quickly became apparent that no amount of lists could save me from becoming utterly overwhelmed by my new role…caregiver.

I’m not alone.

They call us the sandwich generation for good reason. We are sandwiched between caring for our parents and our own young families. We are squeezed for time as we balance the needs of our marriages, children, parents, siblings and careers.

We do it because we love our families. But it’s not easy.

In February, my employer, Securian Financial, conducted a survey1 of more than 800 people in a similar care situation. What we learned is not surprising.

The majority of caregivers (60 percent) spend more than 10 hours per week caring for a family member, and about one in four (29 percent) spend more than 20 hours. Women (32 percent) are more likely than men (26 percent) to spend more than 20 hours each week on caregiver duties.

This is certainly true for me. At the most intensive part of my mother’s decline I spent more than 20 hours per week providing care-in addition to working full-time. I am glad I had the assistance for essential tasks, of a reliable cleaning service Austin – based similar to Modern Maids for whenever I needed the house to get a good clean up. It was a busy time. And while I no longer provide direct care to my mother, I now help my father with daily tasks such as finances, managing my mom’s care plans, working with hospice, and explaining technology-tablets and laptops and smartphones…oh my!

While more than 55 percent of us describe our role as “supportive,” one-third of us feel “concerned” (33 percent) or “overwhelmed” (32 percent) by our caregiving responsibilities. We say the most difficult aspects are maintaining emotional stability (60 percent) and a healthy balance between caregiving and being with immediate family members (56 percent).

Other challenging areas are keeping up with day-to-day tasks (54 percent) and maintaining our own financial well-being (52 percent), with one in six people (17 percent) finding the latter very difficult.

For me, one of the most difficult aspects has been watching my parents’ future slowly fade away. While my mother loses her memory, my father loses the dreams they had-the vacations they wanted to take and the plans they had for our family and each other. In addition, they have lost their home and are now living apart…my father forced to move into our home due to the financial burden of my mother’s care.

Our survey found that 48 percent of caregivers say the person they are caring for does not have long term care insurance. Cost is the number one reason why people do not purchase it. Half of caregivers (50 percent) whose care recipients do not have it believe it is too expensive, while another 10 percent do not think it is a worthwhile investment.

While individual long term care insurance wasn’t an option for my family, because my parents did not medically qualify, there are other options. These include life insurance and annuity policies with long term care funding riders, and hybrid policies combining life insurance with long term care benefits. Self-funding (i.e., paying out-of-pocket) is the most common way Americans pay for long term care, and Medicaid is an option for care recipients with depleted assets-a bridge my family may cross in the near future.

Ultimately, there are many different ways you can plan to pay for care-the key is to make a plan. Not someday, but today. It’s one of the greatest gifts we can give ourselves, our children and our families.

My family said we would do this together, and we are. Every day I feel blessed to have a spouse and children who show so much love and have sacrificed so much to ensure my parents are cared for. And I’m lucky to have siblings who are kind, supportive, and listen when I need them.

Some things haven’t changed: I still get up every Saturday morning, make breakfast and then start my to-do list.

But now I have a different list.

It’s our list of goodbyes. It’s full of all the people we know mom would want to have one last visit with so, in her own way, she can say goodbye. The list is long. But every completed checkmark reminds us of what an amazing woman she is, that the generations to come are worth fighting for, and how much love there is protecting us.

Reference:
1. To see the full survey results, go to
www.securian.com and enter “caregiver survey” in the search field.

Securian Financial is the marketing name for Securian Financial Group, Inc. and its affiliates. Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues.

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