Lengthy policy application forms and underwriting times have long been complaints that consumers have leveled against life insurers. And the complaints don’t stop at the point of purchase.
A new survey by Siegelvision indicates that insurance and annuity statements are among the top five most confusing vendor communications. More than half of consumers polled in the study (55 percent) indicate they’re wasting time and energy endeavoring to decipher these documents.
The percentage is just below other financial statements they find vexing. Among them:
- Mutual fund prospectuses - 64 percent;
- Mortgage terms - 61 percent; and
- Federal tax instructions - 59 percent.
"Until recently consumers took it for granted that they couldn’t do anything about unreadable insurance policies, consumer credit card contracts, healthcare forms and student loan contracts,” said Alan Siegel, the CEO of Siegelvision and author of “Simple: Conquering the Crisis of Complexity.” “The Call for Clarity Survey reveals a remarkable turnaround that indicates consumers are finally demanding more clarity in all communications because there are severe economic consequences if they don’t.”
The survey adds that 78 percent are unfamiliar with insurance terms. Due to the jargon and complexity of insurance documents, they often question whether the policies they purchased provide the coverage the need.
“For prospective customers, [insurance statements] may be so intimidating that they give up.”
The survey adds that 7 percent understand these terms:
- Accelerated death benefit
- Modified endowment contract
- Revocable trust
- Policy endorsement
- Exchange-traded fund
The good news, the report adds, is that consumers are fighting back, especially online. Forty-eight percent of respondents made their complaints directly online to a company, and 16 percent took the time to write a bad review on a website. The rise in consumer activism is also evident in the 10 percent who say they posted complaints using the social media platforms Twitter or Facebook. The study also demonstrates that consumers are not shy in complaining about a wide range of information. Forty-seven percent of the respondents complained about confusing bills, 42 percent criticized unclear instructions and 40 percent were vocal about hard-to-understand contracts. Most important, 55 percent were uncertain they would purchase additional items from these same companies.