Many reports indicating that Americans know they don’t have sufficient life insurance have surfaced over the past few months. So, what’s the solution? According to the 2011 Genworth LifeJacket Study, “7 Key Insights to Help Close the Coverage Gap,” Americans have a desire to work with an agent or advisor to understand the role of life insurance in securing their families’ futures.
Additionally, 40 percent of consumers do not believe they have enough life insurance to meet their families’ long-term needs. The study illustrates that financial professionals should change the way they approach their client base and break down the barriers that keep families from obtaining adequate coverage.
Genworth developed the LifeJacket research project in collaboration with Dr. Gregory B. Fairchild, associate professor at the University of Virginia, Darden School of Business. The research finds that almost half of Americans with household incomes between $50,000 and $250,000 do not have life insurance and those with insurance have only enough to cover 3.6 years of income.
More than 60 percent of those who currently own life insurance said they wanted to meet with their advisor at least once a year. However, of those who desire that frequency of contact with their advisor, only 38 percent indicate that they are actually receiving it. Clients want an annual life insurance review that is fast and efficient—an hour or less, 77 percent of respondents say. Those who are receiving at least an annual life insurance review (47 percent) have the highest level of trust in their advisor.
“While the industry has done an excellent job of offering products that meet the consumer needs, we now have the deep insight needed to bridge the coverage gap and bring consumers to the table, creating a more effective way of doing business,” said Anthony Vossenberg, SVP, Life and Annuities at Genworth. “This study provides advisers and agents with insights needed to educate consumers about their insurance needs and motivate them to secure their financial futures.”
The seven key insights for agents and advisors:
1. New thinking on “trigger” events. The time between a trigger event, such as marriage or the birth of a child, and actual purchase varies widely, depending on the event. There is an opportunity for financial professionals to shorten the timeframe between life transitions and purchases by reestablishing connections and providing consumers greater control in the educational process.
2. Just one hour a year. Consumers want a meeting with their advisor at least once a year, and they want it to be fast and efficient.
3. Stuck in the past. One-third of policyholders today purchased their insurance more than 10 years ago. Their lives have changed, even if their policy hasn’t.
4. Old rules of thumb are dead. Consumers don’t see their insurance needs as “a multiple of X.” They want a personalized view of their life insurance needs.
5. The need for needs analysis. Consumers are highly receptive to online tools that help them understand their specific needs. In fact, 88 percent of respondents said an online calculator would be helpful during the purchase process.
6. Life insurance is a journey, not a transaction. Life insurance is something that can be obtained in increments as needs evolve. Even small increases in coverage over time can mean the difference between financial independence and financial hardship.
7. Beneficiaries: the real-life insurance experts. Listen to your clients—learn how their experiences can help others and why the work you do is so important.
-- This article first appeared on Insurance Networking News.