You will see as a reference I’ve linked to an article from JDPower.com titled “Too Many People Lack Adequate Life Insurance Coverage.” This article bemoans the fact that insurance coverage today is not on enough people and the people that are covered don’t have enough. That is the only reason I wanted to use the reference, was to make that point.
Their response to that is that people should look at the cost and that there are ways to get it cheap.
Simply, the life insurance industry is failing in their mission to insure lives. Is there an identifiable reason for this? Yes, there is and, unless it is resolved there will be no change in the result.
First my career in insurance started as an agent for about six years and then I was a field supervisor for a few years before ending up as an executive vice-president of an insurance company and there was only one way to get the job done then and there is still only one way to get the job done.
Back in the 1970’s when I began my career the life insurance industry was built on the “agency system.” There were independent territorial managers called general agents and there were company salaried men called district managers. However they performed the same function and that was to represent a life insurance company in a given area.
In both cases it was up to these managers to recruit and train life insurance agents. It was not an easy task because about 95% of recruited agents would fail. Selling life insurance is hard because no one wants to talk about their own mortality.
And, it is this very fact that made the agency system a must for success for insurance companies.
People do not call up insurance companies and ask to buy some life insurance well, unless they are sick. Life insurance must be sold and the people that do it well are professional agents who can show potential customers their need.
Then something happened that took life insurance down the wrong path.
Originally life insurance was never meant to be an “investment.” If you purchased a permanent policy that built up cash value you drew a guarantee of three percent on your money. (Not all that bad these days!)
But companies began to develop products that were designed to be more sophisticated and more of a financial instrument. The problem was because the value could be compromised, the protection aspect could be compromised.
The role of the life insurance product became muddled and companies began to struggle to sell the product that was their marketplace niche.
At the same time banks and credit card providers, even funeral homes all began to provide life insurance, not to mention group insurance at jobs.
When all of this happened it became even more difficult for life insurance companies to spend the money required to maintain a physical presence in an area and even more importantly a professional selling staff.
If you note in your community today, mostly you will see agents who sell “all lines” like auto and life.
The net result of all of this is that companies now try to sell insurance through the mail and on television as well as in periodicals.
Unfortunately the family of today often does not have the benefit of sitting down with a life pro and discussing their future needs and what they might need if a husband or wife were to die prematurely.
People often are unaware of what insurance is all about. They should have subtle knowledge of what it is all about and they should even compare life insurance qoute of different companies for a better understanding of this whole process.
I found when I was swelling my first couple of years that other agents never seemed to pay attention to putting on the wife and if anything were to happen to them the family would be in just as bad shape as the husband.
I doubt the life insurance industry is going to right their ship and as a result they are leaving another field open and potential need that may ultimately be addressed by other industries that cannot do the job as well.