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.

Had enough?

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.

Of course, not all life insurance products are so complicated. Term, for instance. Whole life. These products say what they are loud and clearand simply. Its when you start getting into features and riders and constructs that seem as if they were put together with Lego pieces that the going gets rough.

The problem of nomenclature also was touched on by Norse Blazzard and Judith Hasenauer in an April 19 article in which they contended that todays seniors have changed greatly, but the industry is still trying to reach them in the same old ways with the same old language.

“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,” Blazzard and Hasenauer wrote.

“The industry can start doing this by changing its emphasis and terminology…At all costs, it must eliminate the insurance jargon it holds so dear,” they continued. “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.

“If the industry fails to change the perception of how its products work in the elder market, it runs a big risk,” Blazzard and Hasenauer conclude.

The industry is now planning what its going to do in September, which it has designated “Life Insurance Awareness Month.” Raising awareness is a fine goal. But awareness doesnt necessarily mean understanding. Theres still time before September for the business to learn a second languagethe one consumers speak. With that, consumers will not only become aware, but will take the actionpurchasing life insurancethat follows because the product baffles no longer.

Steve Piontek

Editor-in-Chief

“Theres still time before September for the business to learn a second languagethe one consumers speak.”


Reproduced from National Underwriter Edition, April 23, 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.