As American consumers struggle with income levels at 15-year lows (2011 U.S. Census), they seem reticent to purchase life insurance. But what many of them fail to realize is that insurance benefits are often the sole income for loved ones after a family member dies.
In fact, after losing a loved one, many beneficiaries say they wish they had purchased additional life insurance coverage to maintain their standard of living, according to a recent study (2011 Genworth LifeJacketStudy, 7 Key Insights to Help Close the Coverage Gap).
Unfortunately, almost half of “Main Street Americans” (those with household incomes between $50,000 and $250,000) do not have life insurance, according to the study. And those with insurance only have coverage for 3.6 years of income. This leaves their families woefully unprepared. This huge challenge presents two vital questions for producers:
- How can we seize this opportunity to help consumers better understand their insurance needs?
- How do we communicate with them about real-world solutions to the financial concerns faced by the uninsured or underinsured?
After researching this topic for much of 2010 and 2011, we have devised four steps that producers can begin taking today to have productive conversations with these consumers:
1. Dusting off the Old, Bringing them in the New
Check in With Them on a Regular Basis
One-third of consumers secured their policies more than a decade ago, signifying a large population whose insurance needs have dramatically changed since they last purchased coverage. Fortunately for producers, policyholders seem open to regular conversations.
Unfortunately, producers are not following through. Almost half (46%) of those surveyed for the study indicate an interest in discussing life insurance needs with their financial advisors on an annual, semi-annual or quarterly basis. However, 26% of consumers say they could not recall ever having reviewed their life insurance coverage with their advisor. This presents a tremendous opportunity to increase sales simply by meeting with clients on a consistent basis to discuss existing policies and ensure they are aligned with current needs.
2. More Than a Passing Moment
Use short-term events to start long-term planning
Most producers know that consumers are more likely to seek out insurance when a milestone event occurs. A recent report from LIMRA (“Trillion Dollar Baby Growing Up,” 2011) finds that almost half of consumers are more inclined to shop for life insurance following a moment such as marriage, the birth of a child, divorce or the death of a loved one. But a prevailing misconception is these are one-time, fleeting-moment sales opportunities that simply provide consumers with immediate relief. Not so.
The Genworth LifeJacket Study reveals a significant gap between when these “trigger” events occur and when consumers purchase insurance. The accompanying chart shows that the average consumer will wait 15 months after buying a new home to purchase life insurance, and six months after changing jobs or starting a new job.
Producers should not view milestone life events as infrequent sales opportunities, but rather as promising benchmarks that can be used to initiate more productive discussions with clients. Instead of rushing to sell the consumer more coverage, smart producers are using the lag after the life milestone to have strategic talks with clients about long-term needs and to offer them high-value products.
3. Talkin’ ‘Bout My Generation