Are A New Breed
When is the industry going to catch up to the new Elder Paradigm?
By Norse N. Blazzard and Judith A. Hasenauer
The insurance industry has become so wrapped up in its demographic models and the needs for retirement security the models uncover that it seems to have lost sight of something. This is the fact that todays seniors are not only living significantly longer than previous generations but also living significantly better. They are healthier, more active and more interested in what is happening in their world.
Most importantly, they are more interested in how to continue to support their active lifestyle after they have completed their normal working years.
The 2 of us began thinking about this after a conference of the National Association for Variable Annuities that included discussion about the elder segment of society. We began re-examining our own attitudes and perceptions of this segment and soon realized that our perceptions have changed along the lines indicated above.
If the life insurance industry were to adopt a similar view of eldersthat they are living better as well as longer–this just might cause a change in how the industrys products are perceived and used. Let us see how this might play out.
For decades, the life insurance industry has tried to sell the concept of “annuitization.” It has amassed volumes of statistics on the populations failure to put aside enough for retirement; on the horrible problems that baby boomers will face as they reach retirement age in the next 10-15 years; on increasing longevity; on the possible failure of the Social Security system; and on the potential ravages of inflation on retirement security.
Could it be that the industry has been telling the wrong story?
Elders are not ready for the rocking chair when they end their working careers. Instead, they are more interested in the continuation of an exciting, healthy lifestyle. They are more interested in skiing, traveling, dancing and playing golf than they are in sitting around waiting to die.
In fact, they do not even like to use the term “retirement,” since it connotes the idea of feebleness, dependence and lack of ability to function.
If you doubt that elders have a serious interest in the continuation of an active lifestyle, you need look no further than all the television ads for Viagra and similar remedies. These ads signal the recognition reached by pharmaceutical companies and their customers that it is important to continue enjoying an active lifestyle even as one ages.
The life insurance industry, on the other hand, has been emphasizing the negative elements of retirement instead of the positive side. In fact, the insurance story has been so negative that we believe the industry may have turned off the very people it has been trying to attractto use annuitization, for example.
What the industry needs to do is, in the words of the old song, “accentuate the positive and eliminate the negative.”
The vast majority of elders we see (including some in the insurance industry) lead active lives. They are active in sports, they volunteer, they travel and they even party! A significant number continue to work in their chosen professions or have started new careers.
The industry needs to change its story to appeal to this new breed of elder–to inspire them to use insurance products that support the new “elder paradigm.” The new elder promotions should appeal to the person who is a healthy, active, contributing member of society.
The industry can start doing this by changing its emphasis and terminology. Perhaps it should even eliminate the use of the word “retirement,” which many perceive as a negative. At all costs, it must eliminate the insurance jargon it holds so dear.
It needs to invent new positive terms for “annuitization,” for example, and even for the basic product, the “annuity.” It needs terms that connote that its customers are saving for the continuation of an active life–when they will finally have time to indulge in their favorite activities.
If the business is to succeed in creating an aura of the elder as an active, healthy, productive and contributing member of society, it must not only change terminology–it must also change the direction taken in its advertisements, sales materials and sales training. It needs to create the impression that the business is helping people create the financial wherewithal to support the new, active lifestyle that elders seek.
If the industry fails to change the perception of how its products work in the elder market, it runs a big risk. This is the risk that the dismal rate of people using insurance products when they end their normal working years (you notice, we did not say “retirement”) will continue.
Such a shift of emphasis will not be easy. It will require creative minds to seek new horizons for the description of familiar products. It will redefine the industry. It will change perceptions of regulators who, like the industry, have been mired in the past.
Granted, the use of a new term for “annuity” may cause some regulatory problems. But creative minds should be able to deal with this new characterization.
This shift of emphasis may require business leaders to rethink the industrys products, as well. It may be that todays portfolio of insurance and annuity products is incompatible with the concept of an active lifestyle after the end of the normal working years.
The picture of old people sitting in a chair rocking away the rest of their lives appears to have little relevance to the 21st century senior market.
The industry needs to convince seniors that it has the best way to replace the income they have enjoyed during their working years with income that will support their lifestyle when they have the time to enjoy it.
Remember, income replacement is the story the business has been trying to tell for years. It just needs to make sure it now has the right emphasis.
Norse N. Blazzard, JD, CLU, and Judith A. Hasenauer, JD, CLU, are attorneys in the Pompano Beach, Fla., office of Blazzard, Grodd & Hasenauer, P. C. Hasenauer chairs the Regulatory Affairs Committee of the National Association for Variable Annuities. You can e-mail them at: [email protected].
Reproduced from National Underwriter Edition, April 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.