A young woman we recently met reminded us that innovative life insurance product design is often lost on the "end user." What is vastly more important to customers is receiving reliable information and education about life insurance and financial services.
The young woman is employed in the health care business. When she learned that the 2 of us work in the life insurance field, she asked for advice as to what levels and types of life insurance protection she should have for her family (husband and 2 small children).
It turns out that this woman had a vague notion of how temporary and permanent life products differ but no idea of how they work, what products to consider or how much protection to buy. The only insurance she and her husband have is group insurance from their employers–a pitiful amount in view of their potential financial needs.
When we explained that the information she needed was the purview of professional life insurance agents, the young woman bristled. She said she did not want someone to high pressure her into buying something she did not want. After all, she believed she could buy term insurance online and that would be better than nothing.
After delving deeper, it became obvious that her needs were far more complex than she would be able to solve in an online life insurance transaction. What she needed was a traditional analysis of the elements necessary in insuring human life values–what used to be called "capital needs analysis." That is, she needed to take into consideration her family's needs if she and her husband were to live to retirement, if one or both were to die prematurely or if they should become disabled.
Again, we reiterated that this type of analysis is best performed by a professional life insurance agent–someone who has all the tools necessary to perform the analysis and to follow such an analysis with intelligent recommendations. Again, her knee-jerk response was, "won't he just try to sell me something I do not need?"
When we described the various alternatives and elements she should consider before making a decision, her reaction was, "this is too complex; can't I just do something simple?" We answered that simple solutions to complex problems are, in reality, merely a postponement to solving the real problems. Again, we recommended she consult a professional agent who could help her.
We prefer permanent life insurance as the best all-around approach for solving long-term financial problems. Nevertheless, one size does not fit all and temporary insurance may be absolutely necessary for younger folks with limited amounts to spend on the peace of mind that life insurance brings. Also, the life insurance industry is in a period of transition–an era in which professionals are likely to be less involved in tax planning for the affluent and more concerned about providing financial security for average Americans.
