Are you only having half of the life insurance conversation?

A new study from Atidot found that just 26 percent of the life insurance need in the United States is currently being met. The study estimated that this translates to nearly $70 billion in premium on an annual basis.¹ More importantly, this just goes to highlight the risks facing many of today’s consumers and their families. It’s easy to speak to the life insurance gap in broad statistics, but it’s important to remember what that gap means. For many, it means their home, their savings, an education for their children and their family’s livelihood could be at risk if they were out of the picture.



The study also identified three key ways in which insurers are failing to effectively communicate the importance of life insurance. These were: insufficiently targeting the right people, contacting the right targets at the wrong time and providing inappropriate coverage recommendations. When it comes to targeting consumers in the world of voluntary, we don’t always have freedom to determine who we sell to and when we have that opportunity, so it’s that last point that I really want to focus on. 

The challenge of providing the appropriate coverage recommendation is something we can influence. And, when you think about it, convincing someone to purchase life insurance is only half of the conversation; consumers need to know how much to buy as well. If a consumer buys life insurance, but is still significantly underinsured, they’re still not getting the protection they need. Much of the life insurance gap does come from people who have no life insurance, but a lack of understanding about how much life insurance and what other future coverage needs like LTC can be meet is needed is a huge challenge as well. In addition, they may not be aware of other future coverage needs, such as long-term care, which can be addressed by some life insurance products. Roughly 40 percent of people do not know how much life insurance coverage they need.²

So what can we do?

This all, of course, begs the question: what can we do? Below are three key ways to tackle the issue to make sure we’re addressing both halves of the life insurance conversation:

• Education, education, education – Communication with employees before they enroll in their benefits as well as providing one-on-one enrollment counselor resources to guide them through enrollment is essential to providing the right amount of protection for consumers. Many consumers may not know what questions to ask to start determining their need, so do everything you can to educate them and provide guidance to set them on the right track.
• Provide policies that match their needs – Life insurance needs can change as circumstances change. The need for insurance protection is generally higher during your working years; this is typically when you have kids growing so there is more on your plate than when you’re an empty nester. There are lots of ways to tackle changing needs throughout a person’s life; whether it be flexible policy designs or riders that provide guaranteed issue automatic increases in policy value. There is also the option to offer products like Trustmark’s Universal Lifevents®, which automatically adjusts to the needs of consumers throughout their life with both life insurance and long-term care coverages. Matching a person to their insurance need can start with offering products and features that help consumers customize protection to what works for them.
• Term and perm - It’s also important that employees are educated and take advantage of life insurance offerings of both group term and permanent life protections such as Universal Life to balance short and long term needs over there life time. Sometimes, people approach this with the mindset to pick one or the other, but in reality, they may need both to strike the right balance.

A lot has been said about the need for life insurance both here on our blog and elsewhere within the life insurance industry. Undeniably, that’s an important part of the conversation and one that needs to be had. But, if we are only having that half of the conversation, we’re selling consumers short both figuratively and literally. To get consumers the protection they need and close the life insurance gap we need better education and better products to meet their needs. It’s not about just selling a policy, it’s about selling the right policy for the customer.

¹ “What can we do about Under-Insurance in the USA?” Atidot. January, 2019.
² “Facts about Life”. LIMRA. 2018.