A young woman we recently met reminded us that innovative life insurance product design is often lost on the “end user.” What is vastly more important to customers is receiving reliable information and education about life insurance and financial services.
The young woman is employed in the health care business. When she learned that the 2 of us work in the life insurance field, she asked for advice as to what levels and types of life insurance protection she should have for her family (husband and 2 small children).
It turns out that this woman had a vague notion of how temporary and permanent life products differ but no idea of how they work, what products to consider or how much protection to buy. The only insurance she and her husband have is group insurance from their employers–a pitiful amount in view of their potential financial needs.
When we explained that the information she needed was the purview of professional life insurance agents, the young woman bristled. She said she did not want someone to high pressure her into buying something she did not want. After all, she believed she could buy term insurance online and that would be better than nothing.
After delving deeper, it became obvious that her needs were far more complex than she would be able to solve in an online life insurance transaction. What she needed was a traditional analysis of the elements necessary in insuring human life values–what used to be called “capital needs analysis.” That is, she needed to take into consideration her family’s needs if she and her husband were to live to retirement, if one or both were to die prematurely or if they should become disabled.
Again, we reiterated that this type of analysis is best performed by a professional life insurance agent–someone who has all the tools necessary to perform the analysis and to follow such an analysis with intelligent recommendations. Again, her knee-jerk response was, “won’t he just try to sell me something I do not need?”
When we described the various alternatives and elements she should consider before making a decision, her reaction was, “this is too complex; can’t I just do something simple?” We answered that simple solutions to complex problems are, in reality, merely a postponement to solving the real problems. Again, we recommended she consult a professional agent who could help her.
We prefer permanent life insurance as the best all-around approach for solving long-term financial problems. Nevertheless, one size does not fit all and temporary insurance may be absolutely necessary for younger folks with limited amounts to spend on the peace of mind that life insurance brings. Also, the life insurance industry is in a period of transition–an era in which professionals are likely to be less involved in tax planning for the affluent and more concerned about providing financial security for average Americans.
Yet, as we talked with this young woman about products and the various needs they can fulfill, we became painfully aware that she had never been exposed to the information necessary to make some of the most important decisions of her life and that she had never been provided even the most basic education about financial concepts fundamental to 21st century living.
The good news is that we were able to convince her to seek advice from a professional insurance agent we know, a person who works to ensure that clients understand what decisions have to be made, the various alternatives available, the compromises essential to the process and the fact that client needs must always be paramount to those of the agent. We are convinced a good outcome will result.
Still, we have lingering concern that many people have been let down by the educational system and the financial services industry. This results from failure to educate people about the fundamentals of the personal economic process. It results from the insurance industry’s failure to provide general information about life insurance–how it works and how it is designed to satisfy differing needs in life.
More importantly, it results from failure to inform the public of the importance of the analysis and advisory function performed by the professional life insurance agent. Hence, the common misconception that insurance professionals “will just sell something their clients do not need.” Those who have worked with professional agents know that is not so, but the misconception persists.
Times of economic fluctuation are times where information is essential to financial survival. It is a time to concentrate less on product and more on providing information and education to enable people to understand what the life insurance industry does and how important this insurance is if Americans are to be prepared for the future.
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. Their e-mail is: Norse.Blazzard@bghpc.com.
This is a time for the life insurance industry to concentrate less on product and more on providing information and education