Reaping Rewards During Life Insurance Awareness Month
By Michael Prochno
September is Life Insurance Awareness Month, and for producers working in the group market, the renewed interest generated by this event can lead to increased sales opportunities.
Life Insurance Awareness Month highlights the need for this critical coverage. Program sponsors will run a campaign that includes print and radio ads, a special “Real Life Stories” section in Newsweek magazine, and more. For additional information on Life Insurance Awareness Month, check out the National Association of Insurance and Financial Advisors Web site at www.naifa.org.
This September is the perfect time to approach new clients or suggest plan enhancements to existing clients. Throughout the month, youll want to remind current and prospective clients of all the benefits of group life insurance. Here are some key points to remember:
Americans are underinsured.
The number of Americans covered by life insurance has been declining for the last 20 years. In fact, 39% have no life insurance at all.
What is more, many Americans are dangerously underinsured. Even though they have life insurance, their coverage amounts are so low that their beneficiaries would find it extremely difficult to maintain their standard of living.
According to current industry guidelines, one to two times salary is the minimum amount of insurance individuals need. This is generally enough to cover burial and final expenses only. For individuals who want to provide limited income replacement for their beneficiaries, four to five times salary is suggested.
Many survivors experience serious financial problems.
When premature death strikes, many beneficiaries are shocked by the financial difficulties they face. Some experience problems immediately. And they may not be able to cover everyday living expenses.
In many cases, both household income and assets decline following premature death; expenses like medical bills and burial/funeral expenses further erode savings. On average, it takes a minimum of four to five years to recover financially from the premature death.
But heres the good news: Employers can help their employees protect their families by offering a wide range of employer- and employee-paid life insurance plans. Group insurance plans provide a convenient and cost-effective way for employees to get some of the protection they need.
Group life insurancea popular choice for employees.
Buying insurance at work has become increasingly common in the U.S., especially among first-time buyers who prefer group plans to traditional agent distribution. Group plans let employees avoid some of the inconveniences commonly associated with buying life insurance.
Recent sales trends also suggest that, in addition to employer-paid basic term life plans, more employers are offering supplemental life plans, both term and whole life, to their employees.
Group plans generally offer savings for employers and employees.
Group life insurance plans can be employer paid, employee paid, or a combination of both. Recent sales trends suggest that sales of voluntary products will continue to increase as employers look for ways to decrease benefit expenses.
Regardless of who pays, coverage is provided at group rates, which are generally lower than rates charged for individual life policies. This is especially important because consumers often cite cost as a reason for not having adequate coverage.
Many carriers accept premium payments via EFT or automatic payroll deductions. Employees appreciate these convenient services because they eliminate the risk of lost or late payments and the hassle of payment coupons and mailing delays.
Helping employees understand their options.
Surveys of potential life insurance customers show that too many individuals are overwhelmed by their options and unsure of how much insurance they need. As a result, they dont buy insurance. So education is essential.
Producers wanting to sell group plans must partner with an insurance carrier who understands the importance of employee education. Look for carriers who provide a range of clear, concise employee communications in multiple formats, such as printed materials or Web sites.
Employees need to know which coverages theyre eligible for, how much coverage they can get and how much it will cost. Some carriers even offer insurance needs calculators, which help employees determine the coverage amount thats right for them.
Special benefits make group plans more attractive.
Many individuals overlook the value-added plan enhancements included with their coverage. Producers should remind clients of the benefits these services offer. Examples include free financial counseling for beneficiaries or a waiver of premium provision for employees who are disabled and cant work.
Also critical is an accelerated payment of benefits provision for the terminally ill. This is especially valuable because many individuals who suffer premature death are seriously ill in the months before they pass away.
Clearly, group life insurance plans offer numerous benefits for clients and employeesand more sales opportunities for you. Considering the new emphasis on the need for life insurance, the popularity of buying insurance at work and the free national publicity generated by Life Insurance Awareness Month, September 2004 is the perfect time for producers like you to focus on new sales of this valuable coverage.
Michael Prochno is vice president of group insurance business development for Prudential Insurance Company of America, Newark, N.J. He can be reached via e-mail at [email protected].
Reproduced from National Underwriter Edition, September 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.