Members of Generation X believe they will need to save at least $1 million before they can retire. Who can help them save it?
By Cyril Tuohy
The nation has emerged from the traditional long Thanksgiving weekend, the eight days of Hanukkah are winding to a close and Christmas decorations are going up.
But all life insurance policies get is the equivalent of a big, fat “no, thanks.” See the envelope resting by the mantelpiece or beneath the tree? There’s a higher chance that envelope will contain an iTunes card or – heaven forbid – a lowly savings bond than a life insurance policy.
“That’s the million-dollar question,” said Steve Bygott, assistant vice president of core markets services at Colonial Life & Accident Insurance.
Although insurance offers the meaningful gift of long-term security, it is rarely a holiday gift. Bygott questions why people insist on spending hundreds of dollars for a new electronic device when the money might get them another $5,000 or $10,000 worth of life or disability insurance coverage?
It is unusual for children to ask parents to fund higher limits on a life insurance policy, or to boost a death benefit on life policies? Many people are underinsured but still the lines at FAO Schwarz circle the block.
Life insurance and annuities, a life and income protection product, start with a handicap, Bygott said. Who wants to think about loss, disability or death, particularly during the holiday season? “It’s not a fun conversation piece,” Bygott said in an interview with InsuranceNewsNet. “People don’t want to think about those bad things and people don’t think it will happen to them.”
Yet, holidays when everyone is together is exactly when families need to speak about purchasing new or adjusting existing coverage for the family breadwinner, or members at greatest risk of injury or losing their income.
Compare the sale of life insurance to the auto dealer hawking Black Friday deals. Cars are utilitarian objects that buyers can touch and even take for a test drive.
John Doe’s $200 monthly installments disappear from his checking account to pay for a contract that will pay him back in the distant future. His sister, Jane, who lives across the street, pays $199 a month for a new Chevy Malibu and drives it past her brother’s house on her way to work.
Not surprisingly, 77 percent of more than 1,000 U.S. employees polled recently said they would spend several days or more researching the purchase of a new car, while only 67 percent of employees would spend time researching life or health insurance, according to a recent Colonial Life poll.
“There’s not a Hallmark holiday for insurance,” Bygott said. Nor are there calendar pegs around which more life insurance might be sold. President’s Day, Easter Sunday, Memorial Day, Labor Day, back-to-school, Halloween, Columbus Day – none gives people an excuse to scurry to their advisor to discuss critical illness riders on their policies. And because so much insurance is sold through the workplace, much of life’s protection products aren’t a retail transaction.
Is the life and annuities industry in need of a radical makeover, more sex appeal, or just more love this holiday season?
The industry has made some strides. This past September, for instance, was the 10thanniversary of Life Insurance Awareness Month, and Congress has dedicated the third week of October as National Save for Retirement Week.
Other insurers are working to galvanize the industry around a public service announcement to make its products and services more appealing, said Stig O. Nybo, president of pension sales and distribution for Transamerica Retirement Solutions. The industry is aware of the need to reach out more effectively.
Underinsured consumers may be short of thanks when it comes to insurance protection, but industry professionals are glad it’s around.
Nybo said he is thankful of the longevity protection products offered by the industry. He said that the value of those products will become apparent as baby boomers age, extend life expectancies and generate new demand for income products.
“That person living to 150 is alive today,” he said, citing an oft-repeated phrase uttered by actuaries and demographers.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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