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June 10, 2007 at 04:00 PM
Consumers are continually seeking new and better ways to prepare themselves and their loved ones for a solid financial future. That’s why they often give in to the temptation to chase the latest trend and “sexiest” new strategy.
Popular consumer media fuels the fire by pushing the hottest new stock, the next emerging sector, the most exotic investment.
Often, however, the more things change, the more the tried-and-true strategies remain the same. That’s the case with permanent life insurance. Some of the most successful producers and many consumers consider proven and time-tested whole life insurance as a valuable cornerstone to an individual’s financial plans.
Unfortunately, a good number of consumers reflexively don’t think that way. They are persuaded by the mantra that they should “buy term, invest the rest.”
The simplicity of that slogan works in its favor. However, it ultimately does many consumers a disservice. It gives people advice that is neither actionable nor considerate of the complexities of their insurance planning needs.
First, “buy term, invest the rest” disregards the fact that a great many people lack the discipline to follow the “invest” part of the slogan. In practice, it turns into “buy term, and spend the rest.”
Indeed, Americans spent more than they earned last year, even as the economy grew. This pushed the personal savings rate to -1.0%, the deepest hole since the Great Depression of the 1930s (U.S. Commerce Department, Jan. 31, 2007).
Second, the slogan implies an “either-or” choice, when for many consumers the best solution lies in a combination of products. For example, adults who buy combinations of permanent and term insurance have the best coverage of all, averaging $306,100 for men and $198,200 for women (LIMRA International, 2005).
For certain consumers and in certain situations, whole life makes eminent sense. That’s why almost 2 in 3 insured adults have some permanent insurance as part of their individual life portfolios (LIMRA International, 2005).
It’s time to look at whole life–or permanent insurance–in a new light. It’s time for people to think “perm,” not just “term.” It’s time for the industry to remind consumers of the attributes that make whole life not only a great solution but also a product well-suited for a time when all are increasingly seeking permanence, stability and guarantees in an uncertain world.
