Is Life Insurance Still Relevant Today?
Although life insurance needs have increased with the growing pop ulation, life insurance sales have not. There is an entire demographic, Gen X and Y, who not only don’t buy life insurance, they’re not even sure what it is.
Why is that? Has this product outlived its usefulness? Has life insurance gone the way of the VCR and eight track—we remember it with fondness but only odd men living in dark basements still know how they work? Of course not.
In this shaky economy, life insurance is arguably more important than ever. The trick is reaching out to this vastly untapped market. How? Not by changing the core concepts, but by changing the way the life insurance industry describes them.
For example, I was getting a haircut the other day when my hairdresser, Sarah, and I started talking about life insurance. Amazing how the topic just comes up. Sarah is 24 years old, married and pregnant with her first child—our vast, untapped target market.
Like any good financial advisor, I asked Sarah if she and her husband had purchased life insurance yet. She said no, but that her dad had mentioned it and suggested they buy it. But they hadn’t done it.
She and I continued to talk about the importance of protecting their incomes in the event that one of them died early and, at one point, she asked me the most intriguing question. She asked me if life insurance ONLY pays out if you die.
Now most of us in the industry might be thinking, “Well, of course you have to die to use it.” But in her mind—and I propose that in the minds of many young people like her—she was thinking, “Why would I want to use my hard-earned money to pay for something I will never get to use or even get to see how it works. How stupid to buy a product that ONLY pays out if I DIE.”
Some insurance companies have gotten a little more creative in their life insurance product design and built plug-ins like long-term care, disability and critical illness riders so that there are some living benefits. Although these are somewhat attractive concepts, this younger market is not impressed. If we want to reach them, we must do better.
How? Life insurance will never be sexy, but it’s time to crawl out from under our rock, put on a new shade of lipstick and get asked to the big dance.
Our industry is still using the original wording from the Stone Age like policy, premium, agent and beneficiary to describe the features and benefits of our products. These are not fun words. Sarah did not like these words. For her age group, these words conjure up completely different thoughts and responses than the traditional insurance buyer.
Wikipedia, one of the most popular websites for young people searching for information, gives great insight to how this age group thinks. Wikipedia says, “A policy is typically described as a principle or rule to guide decisions and achieve rational outcome(s).”
I looked up the word “premium” and there were literally a dozen different definitions, none of which defined it as payment for insurance coverage. And the word “agent” was even worse, giving several negative definitions—particularly for those that are young, independent and feel invincible.
If we are going to insure this demographic, we must reinvent our language and our story. No one disputes the tremendous value and benefits of life insurance for young American families. Generations in the past understood this concept. It’s time to rework our story and use relevant language to clearly communicate with this next generation.
As I was leaving my hair appointment the other night, I mentioned to young Sarah that I can help her family with life insurance, help them put together a budget (they didn’t have that either) or anything else like that. As she wrote down her email address for me, she turned and gave me this big smile and said, “You can be my financial coach!” Again, I was intrigued. So that’s what she wants—a “coach”—not an advisor and certainly not an agent. Sarah was drawn to the idea of having a financial coach.
Did you know that, in August, State Farm opened a coffee house in downtown Chicago called Next Door (www.nextdoorchi.com)? One of the things they provide is financial coaching—at a coffee house. Do you know anyone who has recently graduated college and drinks coffee? So, it is not about changing the product, but simply changing its packaging. Life insurance is absolutely still relevant. But unless we change the way we talk about this concept with the next generation, our message may never be heard. And the generation of children that follow may be the victims of our inability to crawl out from under the rock.
By Christi M. Daughenbaugh for InsuranceNewsNet Magazine. Christi is the Vice President and Chief Operating Officer of Dallas-based Borden Hamman Agency and the 2011 NAILBA Chairman of the Board. NAILBA member agencies represent 250,000 producers who deliver more than four billion dollars in first year life insurance premiums annually. For more information visit http://www.nailba.org.