Whether you’re a “car person” or your wheels are just a way to get from point A to point B, you likely wouldn’t even drive them off the lot without knowing they’re covered bumper to bumper by a good insurance policy. Like they say, accidents happen — and have you checked the cost of repairing a minor dent these days?
So why are so many workers driving around with no protection for their economic engine: their value to their family as a wage earner?
The fact is Americans are dramatically uninsured and underinsured for life insurance. Life insurance ownership is at an all-time low: 41% of U.S. adults have no life insurance at all,1 and 43% of those who do have coverage admit it’s not enough.2 This creates a nation of families who could be on the brink of financial ruin if a primary wage-earner dies.
The good news is you can play a key role in strengthening this financial safety net by helping your clients make life insurance coverage available to their employees easily and affordably — and at no cost to your clients’ businesses.
Incomes in peril
Who’s at risk? In two words: nearly everyone. Both men and women are less likely to own life insurance today than they were in 2004.1 The odds of not having life insurance have increased dramatically for every age group since that time, and only 1 in 10 insured adults owns both permanent and term life insurance — half as many as in 2004.1
Consumers are likely to delay the purchase of additional insurance because they have other financial priorities right now or feel they can’t afford it. High unemployment, reduced household income and increases in daily living expenses have caused many people to postpone their financial decisions. They’re not sure how to fit insurance premiums into their budgets on top of other priorities demanding their attention. But this is a frighteningly short-sighted viewpoint.
“Families today are struggling to make ends meet,” says Jeff Koll, Colonial Life’s assistant vice president, life and disability products. “But the death of a wage earner can push many families into poverty.”
And not just in a year or a few months — tomorrow. More than one-third of households say they would immediately have trouble meeting everyday living expenses if a primary wage earner died today.2
Clearly, too many Americans risk falling through the financial safety net that basic life insurance can provide.
Rev the sales engine
If your clients are like most employers, they want to offer competitive benefits programs that meet their employees’ needs. After major medical insurance, life insurance may be the most important coverage every worker should have. And as we’ve seen, underinsured consumers need affordable benefits solutions that reduce their risk and give them security and peace of mind, especially in the current economy.
How can you help your clients make this vital, basic protection available and ensure their workers have a strong financial safety net in place?
• Recommend voluntary insurance. Voluntary coverage is selected and paid for by employees. Employees can choose the coverage type and amount that meets their needs and pay for it through convenient payroll deduction. There is no direct cost to the employer. Employees can gain access to less-expensive insurance than they could get on their own. That not only benefits them financially, but also increases morale, satisfaction and productivity.
• Make it part of the annual benefits enrollment. Life insurance is sold, not bought — but there are plenty of willing buyers out there who know they need coverage. Many consumers procrastinate over their purchases and won’t proactively seek out insurance until they need it and it’s too late. For example, 54% of those likely to buy life insurance in the next year say they just “haven’t gotten around to it.” More than one-third of these consumers say they haven’t bought life insurance because no one has contacted them.2
• Include different types of life coverage in your portfolio. Whole life, universal life and term life products have different features and work best in different situations. So do individual and group policies. Ask your client to make several options available so employees can select the most appropriate coverage they can afford. For example, group term life insurance is typically a lower-cost option that’s simple to explain and understand. Guaranteed issue coverage usually is available, even for smaller groups, and most policies can be converted to permanent coverage later on, when the employee’s income has grown or needs have changed. Some newer versions include riders that offer additional coverage for travel, catastrophic events or other special situations.
Talk is cheap — and works!
Many people put off buying life insurance because they simply lack the knowledge to make an informed purchasing decision. They don’t understand what type of coverage to buy or how much they need. And when consumers don’t understand their choices — especially the type of coverage they need for their own personal situation — they’re not likely to buy. In fact, nearly half of those who need life insurance say they haven’t bought coverage because they don’t know how much to buy.2 And employers agree: only 41% of employers in a recent survey said their employees understand the need for life insurance coverage very well.3
This is where personal benefits counseling can really make a difference. Surveys by Colonial Life of more than 15,000 employees who met individually with benefits counselors during their enrollments prove the effectiveness of the one-to-one method. Virtually all employees (97%) surveyed said personal benefits counseling improved their understanding of their benefits and that this type of communication is important (98%).4 Employers also find value in one-to-one benefits counseling. Almost 60% of employers believe personal benefits counseling sessions can strongly improve employees’ understanding of their benefits and their coverage needs.3
I did say cheap, but a better word is free. A top voluntary benefits carrier will offer one-to-one counseling as part of its enrollment services at no charge. The carrier’s benefits counselors can help employees understand their benefits choices — both core benefits and supplemental coverage, including voluntary life insurance. Most employers — and likely you, as well — don’t have the resources to meet with every employee individually and explain the choices. And there’s no need to incur additional expense paying an enrollment firm to do this when a voluntary insurance carrier will do it for you.
Offering life insurance should be one of the first steps your clients take to ensure their employees have a strong financial safety net in place. With voluntary life insurance products in your portfolio and an effective communication strategy in place, you can build your sales and help your clients offer the basic protection every American worker needs.
Elana D’Arciprete is vice president of sales for the Southeast region of Colonial Life. She can be reached at (334) 472-9200 or erdarciprete@coloniallife.com.
Colonial Life & Accident Insurance Company is a market leader in providing insurance benefits for employees and their families through the workplace, along with individual benefits education, enrollment technology and personal service. Colonial Life is based in Columbia, S.C., and is a subsidiary of Unum Group, one of the world’s leading providers of employee benefits.
Footnotes:
1. LIMRA, “Fast Facts About Life,” 2011
2. Retzloff, Cheryl, “Trillion Dollar Baby — Growing Up,” LIMRA, 2011.
3. Colonial Life, Life Insurance and Disability Insurance Survey, October 2011.
4. Colonial Life Benefits Post-Enrollment Survey, Dec. 2011.
