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How to Close the Gap in Life Insurance Literacy

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What You Need to Know

  • Many consumers have no idea how to buy life insurance.
  • Some financial advisors and planners think selling coverage is hard.
  • The new simplified issue underwriting systems can make the process easier for the advisors as well as for the consumers.

When posed with the question of whether to buy life insurance, a reported 31% of Americans in a recent study said they were more likely to seek out a life policy because of the COVID-19 pandemic. This LIMRA data shows that even a year after the pandemic’s onset, people’s heightened awareness around their mortality was still high — and it may very likely stay that way, as the pandemic shifted most everyone’s perceptions in one way or another.

And yet, 48% of Americans are still uninsured. What’s more, of those that are uninsured, 65% say that they don’t have insurance mainly because they don’t understand how to enroll in a plan, or know what type of insurance policy they need. They find the process overwhelming and burdensome.

Advisors Say the Same

Many financial advisors and planners also fall for this misconception: that incorporating life insurance into your service offering is too much of a hassle.

Here’s where we see the massive knowledge gap in what I like to call life insurance literacy. As an advisor, you probably hear (or use) the term “financial literacy” just about every day, and you’re likely as“literate” as a person comes. But where would you say you fall on the life insurance literacy scale?

If your aptitude toward life insurance is on the lower end, that’s OK — you’re certainly not alone. But there’s no time like the present to start expanding your offering and adding more value to your clients in areas that will matter most to them at the end of the day.

If you have a client who owns a business, has financial dependents, or is seeking out more methods of tax-deferred savings, it’s essential they have a solid life insurance plan in place. The latter reason is particularly timely, given the 2020 Taxpayer Certainty and Disaster Tax Relief Act’s ability to bolster life insurance policy savings. Essentially, the law enables people to accumulate cash value through life policies while sidestepping taxes on any gains.

How to Better Evolve

So we’ve established the demand and the entry point for financial advisors. But how do you go about actually incorporating a life policy offering into your client service wheelhouse?

Thankfully, it’s never been easier to find quotes and file life insurance applications on behalf of your clients.

There are a couple of major shifts that are making life insurance adoption extremely efficient in today’s market. Due to simplified issue insurance, generally healthy people can answer a handful of questions to qualify for most carriers’ underwriting rules. And instant decision insurance means people can avoid a trip to the doctor’s office, where medical exams were once required to enroll in a life insurance policy.

With the onset of incredible new digital platforms to facilitate the entire quoting and e-application process, advisors can also find various policy and quote options and process their clients applications almost instantaneously.

The digitization of the life insurance sector has made it so anyone — financial advisors, planners and wealth managers — can handle all of this for their client in just a few minutes. And while the time investment is minimal for you as the service provider, the ultimate benefits that your client receives are invaluable and vast.

We look at it this way: Financial literacy and life insurance literacy are crucially important, and they are not mutually exclusive.

By understanding the current life insurance landscape, advising your clients on what types of policies will best protect them and their families’ future, and tapping into the incredibly powerful yet efficient platforms now available, you’re offering the most holistic service mix to your client that will facilitate greater trust and value within the relationship — and increase the likelihood of them (and their family members) being life-long clients.


Mark Tattersall (Photo: Back9)Mark Tattersall is the principal at BackNine Insurance, a life insurance wholesaler, and the CEO of Quote & Apply, an electronic life insurance application and price quoting platform. He is based in Westlake Village, California.

(Image: Shutterstock)