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April 04, 2011 at 10:04 AM
Today, I am writing this at home because I must attend a funeral for a neighbor (let’s call her Mary, although that is not really her name) later in the morning. She was a very nice old woman who grew tomatoes in her backyard and sold them at curbside during the summer. She banked the money to buy her grand-kids Christmas presents. She was a reliable customer for my daughter’s Girl Scout cookies and for my son’s Cub Scout’s popcorn drive. And for the last year or more, she was nowhere to be seen as she drifted in and out of the hospital, gravely ill, but always willing to accede to her husband’s desire to bring her home, because he simply could not bear to be without her. To say he is devastated is a gross understatement.
Mary’s family makes very little money, and the primary wage earner is her de facto son-in-law (let’s call him Bob) who I am friends with, and who is essentially supporting the entire family. The whole situation is a little messed up, as Mary’s son and daughter (whom Bob is involved with) are either earning minimum wage or not earning anything at all (as is also are Mary’s adult grandchildren), and it is up to Bob to make every decision, provide almost every dollar. In the end, it was Bob who had to make the call on removing Mary from life support, because her husband could not. I suspect this happens a lot more than I realize.
Mary was also uninsured, and as a result, Bob has has to pick up her funerary costs. At one point, he seethed to me that Mary’s kids have made demands on what kind of funeral Mary deserves but have so far made no effort to help pay for any of it. But at the same time, Bob’s anger is tinged with a sadness that Mary and her husband, in their later years, simply could not afford to insure themselves. I am not certain how common this scenario is, but you can see it coming a mile away: two elderly seniors living on fixed incomes for years without two spare nickels to rub together.
At the same time, I am reminded of those infamous LIMRA numbers from last year that pointed to the lowest rates of individual life insurance ownership since WWII (though more recently, those numbers have started to recover). The Great Recession has made it hard for a lot of people to keep their policies in force, and with some ominous rumblings that there might even be a double dip in the future, policy lapses might become an even bigger issue than they already are (especially as companies like Coventry and the rest of the life settlement industry appear to be on the rise once more, only too eager to capitalize on lapsed policies).
I had a conversation with an industry analyst last week as we discussed some possible story ideas we could develop together, and the concept of how the industry prices itself came up. So did the notion of a world without life agents whatsoever – where life insurance is commoditized to the point where an intermediary is unnecessary and where commissions are removed from the transaction altogether. In many ways, this seems like a natural evolution, even if it would spell disaster for the industry in the short term. After all, life insurers, and stock companies in particular, have largely given up on maintaining career or captive sales forces, and there are companies out there that have proven a direct sales strategy can work.
