How can it be that a nation of supposedly highly educated citizens has 68 million adults with no life insurance?

This number came from LIMRA International, Windsor, Conn., and it has been widely published in various media including National Underwriter.

Have we agents just pointed to the product? Have we not explained the virtues of owning life insurance? I am amazed at how many people have never heard of waiver of premium and don’t know about reduced paid-up coverage or extended term.

Perhaps the most shocking part about this situation is the number of agents who don’t take the time to explain the product. I’ve run into them and so have my customers. Could this be because the agents don’t know either? Or are the agents just in it for a quick sale and nothing more–to be order takers, not life underwriters?

Lack of knowledge and understanding is a big problem, because it is so commonplace.

Check it out for yourself. With the next 10 people you meet, ask this question: Do you own any life insurance? Nine out of 10 will likely answer, “Sure, I have life insurance.” When they say that, remind them that that you didn’t ask “Do you have life insurance?” You asked, “Do you own any life insurance?” The next answer will probably be, “Yes, I have life insurance at work, and my employer pays for it.”

Then, you’ll probably say something like, “Oh, you have group term.”

The response will be, “What’s that?”

The truth is, many people don’t own–i.e., buy–any individual life insurance, and they don’t really understand what they do “have.” But they will say “I’m insured–through my employer’s plan–and besides, I have a 401(k) plan.” I hear that a lot when at group meetings for a new employer account and in one-on-one meetings with various individuals.

If you ask these workers for an explanation–i.e., ask “what do you mean when you say, ‘I’m insured through my employer’s plan”–most can’t explain what they have, where the money is going, or whether they will have it when they retire. They just know they have something, for now.

As a result, millions of Americans reach retirement with no life insurance, not even coverage from the employer’s plan. Yes, they may have a 401(k) retirement savings plan at work, but it may have dwindled or disappeared due to loans, poor performance or inadequate participation levels. (Some 401(k) plans do appreciate, of course, and we all know people who retire with very sizeable 401(k) balances. But others aren’t so fortunate; they may retire with 401(k)s that are essentially gone–if, say, the money went to buy company stock which later plummeted.)

Worse, workers who reach retirement with no individual life insurance of their own will find that their only option at that stage of life is to purchase direct mail modified whole life insurance at a very high premium. Often, this option is not affordable–so the person still won’t own any life insurance.

These are some of the everyday realities that lie behind those 68 million uninsured.

Could it be that the “buy term and invest the rest” thinking has invaded the employee benefits arena, undermining any interest in owning individual life? You bet.

In many instances, the employer supplies the group term and then urges its employees to invest all the money they can into the company 401(k) program. The employees who do so believe this makes them a “team player” and some believe it increases their chances for promotion. (If they are putting most of their 401(k) money into the company’s stock, it’s easy to see how they get to thinking that way.) Besides, they have the group term, right?

Stated or not, that’s the message the workers are getting: You really don’t need to buy individual life insurance; we’ll buy the term and you invest the rest.

But that message is hogwash. Ask the widow next door whose retired husband just died without any life insurance.

Donald S. Hardy is founder and owner of QuantumBenefits.com, an Atlanta insurance agency. His email address is .