Last week, in advance of Mother’s Day, InsuranceQuotes.com released the results of a survey that found 42% of U.S. adults whose mothers are living don’t know whether their moms have life insurance.
Gasp! …Or not. Despite working every day on a magazine called Life Insurance Selling, I have no idea what kind of life insurance coverage my parents have. It doesn’t surprise me that many others are in the same boat.
But shocking or no, that big number signals numerous problems for the industry.
For one, there’s the obvious death benefit issue. Your client’s children can’t claim a death benefit if they don’t know there’s a death benefit to be claimed. And as we’ve seen with the recent problems involving insurers and unclaimed benefits, carriers can’t always be counted on to stay on top of payouts.
But if beneficiaries get jipped out of a death benefit, the industry gets jipped, too. According to LIMRA, 8 in 10 consumers who have had a positive experience with life insurance say the industry plays a critical role following the death of a loved one. When beneficiaries get paid, the industry gains a handful of new life insurance advocates — and producers get potential new clients and referrers.
The fact that parents aren’t talking to their children, adult or not, about their life insurance coverage is also detrimental from an educational standpoint. Until I entered the workforce full time, my experience with life insurance was limited to that scene in “It’s a Wonderful Life,” where George Bailey uses his policy to bargain (unsuccessfully) with Mr. Potter. I also knew it as a slip of paper that confused my sisters and I while playing the Game of Life — which, apparently, removed the life insurance option from its board a few years ago.
Parents who sit down early on with their kids to discuss what life insurance is, how it works and what they own are giving their kids a leg up when it comes to financial literacy. They’re also helping out their kids’ future agents, who won’t have to spend as much time and energy educating their clients. They might even be doing themselves a favor, if the prospect of a life insurance-related conversation with their children reminds them to update their policy.
But none of that will happen, if those conversations never take place.