Most consumers understand the importance of purchasing life insurance, but they usually have difficulty determining exactly how much insurance they need. As a result, millions of Americans find themselves underinsured -- 44 percent of all U.S. households (48 million) either don't have life insurance and believe they should or own life insurance and believe they need more (2005 Facts About Life, LIMRA) -- placing the assets of their estates and the well-being of their survivors at risk.
September is Life Insurance Awareness Month, a perfect opportunity for agents to broaden their commitment to educating employers and employees about the value of life insurance and to help reassess the needs of those who own insurance, as lifestyles and demographics may have changed since their initial purchases.
For example, the work force is aging and demographic trends indicate people are living longer so employees may need to keep their insurance in force longer, as well. Recent changes in demographics and cost-of-living increases require everyone to reassess the effectiveness of their current insurance coverage.
Even though life insurance prices have come down in general in recent years, there is still a psychological block that prevents many people from taking steps to understand their needs. For many of us, it is often hard to think of our own mortality, which the process of purchasing life insurance forces us to face. But life insurance provides invaluable protection, and can be customized to meet specific needs.
One way these needs can be met is through riders. Since most employees don't have the ability to select the type of riders that are available in their group insurance policies, it's important that agents work closely with employers to determine the best combination of coverage for each worker population.
With Life Insurance Awareness Month approaching, it is a great opportunity for agents and brokers to introduce employers to the flexibility of new insurance products and the riders attached to their current employer sponsored policies. Providing this type of information in September, which is typically the beginning of the open enrollment period for employee benefits programs, can help employers make substantial adjustments to insurance benefits they offer employees, and give employees an opportunity to become more familiar with all the options their employers current plan offers. It can result in a win-win-win scenario -- employers can offer better insurance packages at lower costs that can help them retain and better serve employees; employees can upgrade their insurance coverage, protecting their income and their loved ones in the process; and agents can reap the benefits of increased sales through higher participation because employers and employees are more informed, and therefore make better choices.
Education is important when selling life insurance or any employee benefit. There are a number of insurance company Web sites to direct policyholders to that offer loads of information on life insurance products.
These Web sites also frequently contain life insurance calculators where people can calculate and begin to understand exactly how much insurance will truly cover their assets and meet their needs.
With both employees and employers more knowledgeable about their life insurance options, producers should have a better time constructing a true benefits package for each individual company. Keeping in mind the demographics of the employee base, their additional cost appetite and the type of business they are in, it should be easier for producers to decide which types of riders should be included in the overall benefits package in order to increase sales.
Employer-sponsored insurance policies offer the benefits of the aforementioned riders, and in some cases they offer employees additional options to purchase more types of insurance coverage at their own cost, but at the discounted group rate. While the additional insurance benefits might not be free, they do give employers the opportunity to meet the needs of diverse classes of employees.
Couples might need to hold higher levels of life insurance because the economic realities are far different than they used to be. As home prices have soared, mortgage payments can rarely be handled by a single income. That means two income families are becoming the norm. If one spouse dies, the home is immediately at risk. Couples with children headed for college also might find it hard to cope. College costs have skyrocketed, and it can cost more than $100,000 to send a child to college.
Additionally, many Americans are starting families at older ages. This triggers the need for life insurance protection for minor children at a later stage in life than past generations.
In the end, clearly communicating the benefits that are available to benefits decision makers and ultimately employees and understanding societal changes and the subsequent impact on the need for life insurance is one of the best ways producers can insure their success.
From the September 2006 issue of Benefits Selling Magazine • Subscribe!
