Column: Diagnosing The Disconnect Is Key To Closing The Coverage Gap

By Brooks Tingle

September 2021, Life Insurance Awareness Month, just wrapped up. But the message behind it remains. This year’s LIAM theme “With life insurance, I’ve got you,” recognizes life insurance for being one of the simplest ways for someone to show their loved ones that they care.

This annual campaign is more than an important reminder to seek out protection for consumers. For agents, it’s also an opportunity to appreciate their personal impact on families being able to achieve financial security and the peace of mind that comes with it.

Despite what we know about the importance of life insurance and its impact on protecting and building generational wealth, a coverage gap persists: According to LIMRA, 60 million U.S. households are either uninsured or underinsured. Among American adults who are uninsured, nearly 60% say they need the valuable protection life insurance provides.

These figures point to startling financial vulnerability in the U.S. What is encouraging, though, is that consumers, agents and the broader industry all share an interest in closing the gap. While it will take effort, closing in on the gap of underinsured Americans is attainable and worth pursuing. Together we can make it happen.

Diagnosing The Disconnect

To start, we must take an honest look at some of the key drivers behind the disconnect. Among uninsured Americans, the 2021 Insurance Barometer Study reveals a few key themes:

Lack of urgency. Sixty-two percent said they haven’t found the time to get covered.
Knowledge gap. Nearly one-third expressed uncertainty over what type of life insurance to select or how much they need. Among millennials, 4 in 10 believe the sole purpose of life insurance is to cover final expenses.
Overestimating cost. Eight in 10 said affordability is an issue. Among millennials, two in three believe life insurance is more expensive than it really is.

When it comes to the coverage gap, consumer misconceptions are clearly at play. Even when cost is a real concern, I always emphasize that any level of coverage is better than none. For these reasons, education and outreach remain helpful tactics. But getting at the heart of the matter requires a broader sweep. The most proactive move that the life insurance industry can make, for its own sake and that of agents and their clients, is to truly commit to meeting consumers’ changing needs through innovation.

Pivoting Toward The Future

How exactly can the industry engage today’s consumers? The answer lies in transforming life insurance to be future-focused. This means preserving the best of yesterday’s ideas and undertaking dramatic change to ensure that life insurance is not only easier to buy, but also fun and engaging to own. In other words, empowering agents with innovative, accessible and personalized solutions that they can feel even better about offering to their clients.

When agents can sell more and better products, their lives become easier while they generate enthusiasm among their client base who is able to achieve their financial and lifestyle goals. It’s an example of the shared value that’s inherent to our industry. When we lean into this approach, we generate widespread enthusiasm and everyone stands to benefit.

The COVID-19 Effect

Before the COVID-19 pandemic, consumers faced an onerous process to purchase life insurance. The labs, doctors’ visits and paperwork made it one of the most difficult products to buy in the modern economy - and that needed to change. At times, COVID-19 made those traditional steps impractical, if not impossible. In turn, we saw a rapid acceleration of many of the industry trends that were already underway.

Today, we see meaningful steps toward a less invasive, less burdensome and more timely purchase process. It’s unfortunate that it took such a crisis to propel those changes, but now that they’ve taken place, we can’t turn back. After all, consumers are undeniably receptive.

The Road Ahead

The COVID-19 pandemic did more than give industry trends a boost: It offered a glimpse into what’s possible when the industry dares to think big. Especially as consumers address the changes that have taken place during the pandemic, they are much more aware of their need for life insurance as well as their baseline health: In 2020, LIMRA found that 69% of consumers are more likely to get life insurance.At the same time, A ReMark global consumer survey found seven in 10 consumers would like to exercise more and stay more active as a result of COVID-19.

At John Hancock, we’ve been focused on changing consumer expectations for some years. We also believe life insurers should care a lot about helping their customers live longer, healthier lives. As an example of this, we introduced Vitality, which combines life insurance with a technology-enabled program that offers education, support, incentives and rewards designed to help customers take everyday steps toward improving their health and wellness.

By embedding life insurance in consumers’ wellness objectives and helping them along their journey, we are dispensing with the misconceptions that it is a product reserved for specific demographics, such as age or means. We are broadening its appeal, making clear that life insurance is not only within reach, but also able to support families in new and meaningful ways.

After all, we can and should help drive improved outcomes for our customers. Not only in the ways we have for hundreds of years, by providing essential protection that preserves and builds generational wealth, but also in new ways that can help individuals live longer, healthier lives. Achieving this shared value is a potent answer to the coverage gap - made especially urgent against the backdrop of Covid-19’s impact on families - that underscores why the time is right for our industry to offer more personalized solutions, now and into the future.

Brooks Tingle is president and CEO of John Hancock Insurance. He may be contacted at [email protected].