What was on your to-do list today? Did you have to take the kids to soccer practice? Set up auto-pay on your utility bill? How about checking in on dad at the retirement center? Ironically, researching life insurance never makes the top of the list because life gets in the way! We tell ourselves it’s something we can put off.
Not to mention it can be overwhelming and confusing. A study by LIMRA and Maddock Douglas concluded that nearly 19 million life insurance shoppers are stuck in the sales pipeline. According to the survey’s authors, they “intend to buy but the current experience causes them to get stuck along the way.”(1)
Maybe it’s time to get back to the basics.
Life Insurance Awareness Month is all about explaining the fundamental importance of life insurance and helping consumers understand why it is an essential financial planning tool. We must rededicate ourselves to speaking to the potential customer about his or her life situation, in relatable terms.
When I say the life industry needs to get back to the basics, I’m prepared to get a few puzzled looks.After all, we’ve developed sophisticated tools and leveraged technology to drive more profitable growth. We’ve created mechanisms to simplify the application and speed up underwriting. We’ve drilled into the data to learn more about the customer. We’ve deployed marketing and sales strategies that are informed by, and influence, consumer behavior.
But despite all our efforts, the number of completed applications for life policies declined 0.3% in the first half of this year from the previous year and was off 3.5% from two years ago.(2) Clearly, something is missing.
For starters, let’s talk less about our initiatives and more about the need to protect the people you love. Let’s remember why life insurance exists in the first place: to ensure that a family can continue to thrive and enjoy the fruits of life after the death of the primary breadwinner.
The key to a long-lasting relationship is making sure the customer and insurer know and trust each other. It’s never been more important to communicate clearly what life insurance is all about, because consumers are out there kicking the tires. After all, it’s pretty easy to find us; a Google search for “life insurance” brings up about 809,000,000 results in 0.71 seconds. If we speak a language that’s difficult to understand, we are doing them (and ourselves) a disservice. Five out of 7 consumers say they feel more confused after meeting with an agent or financial advisor (3) and more than eight in 10 say the most important factor in purchasing life insurance is how easily they can understand the product. (4)
People are risk-averse - a condition that’s understandable when they don’t have all the information. Four in 10 consumers are afraid of making a mistake with financial decision-making.(5)
These are real concerns, yet instead of addressing them, we tend to spend more time thinking of life insurance as a business that runs less on solutions and trust and more on actuarial assumptions and risk capital. Now is the time to set that notion aside and confront the reality that too many consumers are misinformed or hindered by biases – biases that can be reversed through effective communication and education. Information is power – for the consumer and the insurer.
3. Trustworthy Selling, Joey Davenport, https://www.slideshare.net/joeydavenport/trustworthy-selling
Category: Funding longer lives, Other