Use Open Enrollment To Close The Life Insurance Gap

InsuranceNewsNet

By Jennifer Gassaway

Benefit enrollment season is here. You’ve likely spent the last few months preparing for the marathon of employer meetings, lunch-and-learn presentations and conversations with employees about the importance of benefits coverage. But with all the logistics settled and meetings booked, have you thought about your strategy to help sell the need for life insurance?

Freshening up your life insurance sales approach

No matter how long they have been in the business, many brokers struggle to find new ways to freshen up their enrollment presentations. Group or voluntary life insurance enrollment often hinges on a broker’s ability to make the need for the product well-understood to employee groups that have neither a base understanding of what they need nor time to spend thinking about their coverage gaps.

Large coverage gaps can have big consequences for an employee. LIMRA recently found that more than half of consumers say they would have immediate or near immediate trouble paying living expenses if their family’s primary wage earner died.

However, a number of misconceptions exist around the need for life insurance and/or selecting additional voluntary coverage — especially among Generation X and millennial employees. Many of these employees have avoided or delayed typical life milestones, such as marriage, homeownership and children. They may be unaware of the need for robust life insurance coverage or how it can help provide their loved ones with financial security in the event something happens to them.

During your enrollment meetings, consider how you can bring up and refute common employee misconceptions, which can become a barrier for purchasing life insurance.

Misconception No. 1: “My employer’s base coverage should be enough.”

Group life insurance often is provided as a standard benefit as part of an employer’s base benefits package. A base life insurance offering often comes with a set benefit — which is typically in the range of $25,000 to $50,000.

Although a $25,000 life insurance benefit may sound like a lot of money to some employees, many may not know the amount of coverage they should have. The LIMRA 2015 Insurance Barometer Survey found that 4 in 10 consumers don’t know how much life insurance coverage they actually need or what type of coverage to buy. Not only that, some employees haven’t thought about what the coverage is used for or what expenses their families may still have to pay for if something unexpected were to happen to them.

When discussing life insurance, remind employees that life insurance coverage would need to supplement the income their families would miss out on. Help make this more digestible by discussing common expenses that their salary goes toward, such as mortgage or rent payments, car payments and utilities. In this context, $25,000 may not go very far to help ensure long-term financial stability for an employee’s family.

Misconception No. 2: “I have other, more important, financial priorities”

Making the case for employees to pay for additional benefits — including voluntary life insurance options — can be a tough sell. Employees may feel stretched thin already or may be focused on saving for big-ticket items.

LIMRA recently found that 29 percent of millennials cited saving for vacation as a priority over purchasing additional life insurance. And 23 percent of Gen Xers said paying for recreational activities such as going out to eat, movies or shopping was a priority over purchasing life insurance.

Although many employees are focused on saving — either for long- or short-term goals — many haven’t thought about the ways life insurance can help provide an additional financial buffer. Consider how you can make the connection for employees about how life insurance can ensure that their rainy-day savings fund stays intact and that their family isn’t caught in a precarious financial situation.

Misconception No. 3: “It’s too costly.”

Millennial and Gen X employees have a lot on their plates. Gen Xers often are caring for young children as well as aging parents, while many millennials are trying to make up for high student loan payments and years of lower salaries during the Great Recession. Because of this, these employee groups may be hesitant to add additional bills to the stack they already are paying.

However, 80 percent of all consumers misjudge the price for term life insurance, according to LIMRA research. Gen Xers typically overestimate the cost by 119 percent while millennials often double the price for life insurance and overestimate it by 213 percent.

With employer-sponsored life insurance coverage typically costing only a few dollars per paycheck, help equate the monthly or annual cost to something employees know more about: a gallon of milk, their morning mocha or a tank of gas. Not only that, the cost is usually deducted from employees’ paychecks, making it one less bill for which they’ll have to write a check.

Misconception No. 4: “I’m unattached. I don’t need coverage.”

Gen X and millennial employees have approached getting married and having children in a different way than previous generations have. However, that doesn’t lessen their need for the financial protection that life insurance provides.

One way to make this connection is by reminding employees — regardless of marital status — that there are expenses their extended families could incur after their death; for example, funeral expenses and private loan payments.

A second way to help make the need more apparent is by promoting the additional services that come with life insurance policies in states where these offerings are available. These extras are beneficial for any employee. They include travel assistance, which can help if an unexpected situation pops up away from home, or financial planning tools, which could include anything from identity theft guidance to financial calculators. These tools can help keep an employee’s financial house in order, or make it easier for beneficiaries to help settle financial matters.

With employees of different ages, backgrounds and life experiences in your upcoming enrollment meetings, make it your goal this enrollment season to refute common misconceptions and help better educate employees on the need for life insurance protection.

Jennifer Gassaway is product manager with The Standard. Jennifer may be contacted at [email protected].