The Industry Needs To
Learn A Second Language
The topic of how mystifying life insurancein all its permutationscan be to consumers probably has been studied and surveyed at least a gajillion times. But I have rarely, if ever, heard the case stated so forcefully and pithily as I did in editing an article for the April 12 issue.
Our own Linda Koco reported on a session at the recent life insurance conference in Las Vegas sponsored by LIMRA, LOMA, the Society of Actuaries and the American Council of Life Insurers.
Lynn M. Ferris, associate research consultant in markets research at LIMRA, spoke about targeting the middle market for life insurance. What stopped me short in her presentation was this quote: “There are so many things that bother mid-market people [about life insurance], its incredible.”
She then proceeded to list some of those thingsthey dont know how much life insurance to buy; they dont know whether theyre insurable; they arent sure if they should have all their insurance with only one company; they dont know whether the company will pay a claim promptly; they dont know whether the product is a good value; they find the policy language confusing.
Ferris conclusion should be unsettling for insurance marketers. “For some people, all of this can be so overwhelming, so they do nothing.”
Want a little taste of how overwhelming this can be? I suggest trying to make your way through the thickets of living benefit guarantees in annuities, for instance, without a machete.
Lets see. Theres the guaranteed minimum income benefit, the guaranteed minimum accumulation benefit and the guaranteed minimum withdrawal benefit. There are, no doubt, some others in development. The problem is that these are dauntingly complicated concepts for untutored mid-market customers.
In a way, its like the game of telephone. First, the company has to make the concept clear to the agent; then the agent has to digest the concept; then the agent has to explain the concept to the customer; and then the customer has to digest it. One only hopes that the message is the same at the end as it was at the beginning.