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Life Health > Life Insurance

Winning the underinsurance battle

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It figures that a former star National Football League quarterback is serving as the voice and the face of the LIFE Foundation’s annual campaign to bolster life insurance awareness. These days the organization, guided by President and CEO Marvin H. Feldman, is taking to the offensive with new tactics he hopes will score with new clients and help regain some of the ground the industry has lost with consumers during the past decade.

America is facing what Feldman terms “a crisis of underinsurance,” as documented by figures from LIMRA’s most recent Trends in Life Insurance Ownership study from 2010, which indicated that ownership of individual life insurance had hit a 50-year low, with 11 million fewer American households covered by life insurance compared to six years prior. What’s more, the LIMRA study, conducted every six years, found that 30 percent of U.S. households (35 million) lacked life insurance coverage, up from 22 percent of households in 2004.

However, in the years since those findings were released, the life insurance market has begun to rebound, with individual life insurance new annualized premium increasing six percent in 2012, the third consecutive year of growth, according to LIMRA. Meanwhile, the overall number of life insurance policies sold increased by one percent in 2012, the second consecutive year of positive annual policy growth and the first back-to-back growth years since 1980-81.

While individual insurance companies ride that positive momentum, the Washington, D.C.-based LIFE Foundation finds itself having to do more with less. “The biggest issue we have,” says Feldman, “is funding in general. Every year it becomes more difficult [to secure funding from insurance companies] because every year companies are becoming more brand-centric” and thus, less inclined to financially support an industry organization such as the non-profit LIFE Foundation. While some large mutual companies post record sales, their support for the foundation has dwindled as a result of what he terms a “What’s in it for me?” attitude.

Partly as a way to convince some of those companies that the foundation merits their support, the Feldman-led organization has re-engineered its annual September Life Insurance Awareness Month campaign, building it around a digital platform instead of a print-based advertising strategy as in years past. The shift is aimed at connecting with a consuming public that, from seniors to Millennials, is increasingly tech- and Web-savvy. It’s also designed to yield easy-to-gauge metrics that Feldman hopes will demonstrate that LIFE Foundation programs deliver enough measurable impact to warrant greater industry backing. Its roster of members and partners currently stands at some 165 organizations.

 See also: How to leverage Life Insurance Awareness Month

boomerMoving the needle

With NFL quarterback-turned-sports-commentator Boomer Esiason as spokesman, the foundation is “doing something totally different” with its Life Insurance Awareness Month campaign in 2013, says Feldman. “We’re not doing any consumer-facing print advertising. Everything is digital.” Instead of traditional multi-page advertising spreads in consumer magazines like Newsweek, the campaign will rely exclusively on 15- and 30-second “pre-roll” videos — ads that run prior to an online video that a person has clicked to see — to generate buzz. They’re aimed at what he terms a “moderate” demographic: consumers in the 25-to-45 age bracket, mainly female, with an average income under $100,000.

That digital strategy “is going to enable us to come back to the industry with numbers that show whether we are in fact moving the needle as far as consumer awareness is concerned,” he explains.

To move the needle, the pre-roll ads will attempt to pull at the public’s heart strings rather than their purse strings, notes Feldman. “It’s all about trying to get their attention emotionally — to help people realize they need to consider doing more to protect their family with life insurance. People tend to buy based on emotion anyway, then they justify their purchase decision.”

Indifference among younger consumers is one reason for the sharp drop-off in life insurance coverage nationally, according to Feldman. That, coupled with the recent recession and resulting cutbacks in employee benefits, including the employer-provided life insurance option, have hurt the life insurance industry, as has a perception that the product is too expensive, says Feldman, citing recent research that found that consumers perceive life insurance to cost three to seven times its actual cost.

Feldman says one of his goals as head of the LIFE Foundation is to close the gap between consumer perception and reality. “We need to do a better job as an industry of making clear to people how cost-effective it is to buy life insurance.”

See our infographic: Life insurance by the numbers

While the LIFE Foundation is motivated to help the industry bridge that gap, it can only do so with strong financial backing from insurers, Feldman asserts. “My number one priority is to make sure the foundation remains relevant to the [insurance] industry by fulfilling its mission of inspiring consumers by increasing their awareness of life insurance. To do that, we need to make sure we get appropriate funding.”

Growth strategy

So how best to allocate foundation resources? Creating more life insurance buyers demands addressing both the emotional and practical/fiscal sides of the purchase decision, says Feldman, which puts the onus not only on industry groups and individual insurers but on advisors and agents to find more effective ways to inform and educate consumers.

“I think it’s critical for agents and financial advisors to be part of the [life insurance] education system in the context of teaching people about financial responsibility,” he says. Attrition among the ranks of career agents doesn’t help in that regard, he notes, calling it a “serious industry problem.”

Regaining some of the ground the life insurance lost in the last several decades will be about cultivating new distribution channels, and also about finding new ways to connect with and educate consumers, according to Feldman. LIFE Foundation initiatives such as the LIFE Lessons Scholarship program for college students, LIFE’s next-generation high-school financial literacy, and Life Insurance Awareness Month, along with its Insure Your Love (February), Disability Insurance Awareness Month (May) and realLIFEstories programs, aim to do just that. But they’re a small piece of the puzzle, acknowledges Feldman.

On the communication and education front, there’s still no substitute for direct advisor-client interaction. But given time constraints and dwindling attention spans, advisors and agents who deliver one-on-one contact via new Web-based tools (video conferencing, online chats, etc.) may be more effective in cultivating new clients and better serving existing ones, he observes.

Another way to reach a broader customer base is by devoting more resources to develop non-traditional distribution channels, according to Feldman. Retail — selling life insurance off the shelf via big-box retail chains such as Wal-Mart, Target and Costco — is one such channel. The 2013 Insurance Barometer Study conducted by LIMRA and the LIFE Foundation found that 17 percent of consumers surveyed would be willing to purchase life insurance directly from a retail outlet. MetLife has been testing the waters, he notes, offering one-year term policies through kiosks inside some Wal-Mart stores. “The goal there is to get a client into a product, then to get them to upgrade [coverage] later.”

Direct sales via online distribution channels also represent a promising growth segment, says Feldman. “Even the older generations are looking more to the Internet for education and to make their purchases.”

If those Life Insurance Awareness Month pre-roll ads hit their mark, perhaps it will have been Boomer Esiason who turned them into willing purchasers.

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