We’re living longer and buying less Life Insurance 

I started my sales career as a carrier representative selling life insurance  and truly believe in life insurance to protect families and their assets from premature death. Today, I’m seeing plenty of positive trends; we are living longer and our life insurance rates are decreasing. However, the sad fact is we are buying less and less individually owned life insurance. Here are some of the statistics:

• In 1960, 72% of Americans owned individual life insurance¹ 
• In 1992, 55%  of Americans owned individual life insurance¹
• In 2019, 39% of Americans owned individual life insurance²

Now you may say that employees are covered at work with group term insurance, but as we all know the post retirement conversion or portability rates of group Term life insurance are very low; as in, low single digits. With such a low conversion rate, people are not being covered for basic life insurance needs after they leave employment or retire. They lack coverage for even the most basic of final expenses. This is particularly troubling on top of American’s lack of emergency cash or savings: nearly 70 percent of Americans have less than $1000 in savings.³ In addition, 22 percent of Americans have less than $5000 in savings for retirement and 15 percent have no savings at all.⁴ 

I was asked recently why these individually covered lives are dropping so dramatically. Well the insurance agency distribution system has changed dramatically since the 1960s; agents use to sell insurance over the kitchen table at your home. I am old enough to remember my parents meeting with our insurance agent over the kitchen table. I even bought my first individual Life Insurance policy from him when I entered the workforce. 
Those days are gone and that distribution system is not readily available today. When I got into the insurance business back in 1982, we started selling life insurance policies offered through payroll deduction at the workplace around 1985. That model has helped sustain the number of people who have individual life insurance coverage. But, many brokers aren’t selling voluntary permanent life insurance on their groups.

During that time at my insurance company, we sold permanent and fully portable life insurance as we do today with Trustmark’s Universal Life with long-term care policies. Those products are part of the evolution of life insurance. Honestly, the policies themselves have gotten much better over the years with features like living benefits coverage for long-term care or terminal illness. In addition, most employer-sponsored plans have some guaranteed issue or reduced underwriting available so more insureds can be covered, not less. 

So, we have superior products, the distribution model has improved, rates are good and the need for life insurance has never been higher. It’s a great time to own individual life insurance, so how can we help make sure employees take advantage of what’s available to them? Well, one thing we’ve learned is that we need to create an emotional connection to the product for employees. 

On that note, I was reminded of a real story that a benefits enroller told me after they re-enrolled one of our long-term school system clients. You see, she was assigned the same schools year after year for re-enrollment, so she was able to get to know the employees she would see. She always started her one-on-one session asking what happened over the last year since she saw them last. 

In one session, the employee said she had lost her husband, devastating her personally and financially. She said that she was about to lose her house because, with her husband, they had been living paycheck to paycheck off their two incomes. Now, down to one paycheck, the employee said her electricity was about to be turned off and her mortgage payments were behind as well and she did not know what she would do. The enroller said she thought they had bought life insurance on the employee’s husband a few years back. So, she pulled up the employee’s record in the system, and it showed that she did, in fact, have coverage on her husband. 

The enroller pulled out her cell phone and dialed the Trustmark customer service area and put the customer care representative on speaker phone; after the security protocols with the employee it was confirmed her husband did have coverage and she was told what to do to process the claim. 

After hanging up the phone the employee started to cry. She told the enroller that she just saved her life, the death proceeds would help her cover her back mortgage payments and pay the electric bills and help her through the grieving process. In the end, this is why we sell Life insurance and people need it and buy it. It is for the people left behind because of a pre-mature death. 

We, as an industry, need to find ways to expose employers to these permanent life insurance options so that employees and their families can be covered long after they leave employment or retire. The story from that enrollment counselor is both a great example of why employees need this coverage and also a how we can relay the message in a way they’ll understand; by connecting on an emotional level.

¹ The shocking statistics behind the life insurance coverage gap. ThinkAdvisor. 2013.
² 2020 Insurance Barometer. LIMRA. 2020.
³ The Percentage of Americans With Less Than $1,000 in Savings Is Shocking. The Motley Fool. 2019.
⁴ 22% of Americans Have Less Than $5,000 Saved for Retirement. The Motley Fool. 2020.