(Bloomberg) — Do you have a minute to talk about your death?
It isn't easy to sell life insurance. When investing in a mutual fund, you feel like you're saving money. When purchasing insurance, you feel like you're spending it.
"It's not a pleasant thing to buy," said John Schlifske, chief executive officer of Northwestern Mutual Life Insurance Co., the second-largest U.S. seller of life insurance by premiums. "There's no immediate gratification."
Yet millions of Americans don't have enough insurance to protect their families from death or disability. Life insurance sales are dropping, even as the large millennial generation starts having kids.
Blame, if you like, parents who can't get their act together. Thirty percent of Americans know they need more life insurance, according to a 2015 survey by Limra, a trade organization.
But you might reserve some of the blame for the cautious and conservative industry itself. Buying the right insurance can be tedious and expensive. A recent report from McKinsey & Co. tallied up the unpleasantness: complex and confusing products, paperwork that takes forever to fill out, salespeople who push their wares rather than provide objective information.
The insurance industry has demonstrated a "sluggish response to change," the McKinsey report concluded, failing "to keep up with changes in consumer behavior and preferences."
In the age of Uber and Amazon, insurance is still sold much as it was in the middle of the 19th century, when many of its largest purveyors were founded. Insurance companies have armies of agents stationed in towns across America. Their job is to get to know their neighbors — at the church, the country club, the Chamber of Commerce luncheon — and then lure them to the office for a sit-down.
To many experts on personal finance, the whole setup can seem pretty quaint. In books and online forums, a top obsession these days is minimizing fees. "You can't control the market," the cliché goes, "but you can control your costs."
Insurance agents, meanwhile, often charge fat, obscure commissions as compensation for the many hours it takes to find their customers. Even without commissions, insurers can make it hard to figure out the true cost of a policy or to do comparison shopping.
Insurance companies, like financial advisers, sometimes violate another modern taboo: the one against self-serving advice. In addition to selling essentials such as life and disability insurance, agents may be awarded commissions for selling various kinds of annuities, many of them so mysterious that the agents themselves can get confused.
In his classic investing guide, A Random Walk Down Wall Street, Princeton University finance professor Burton Malkiel is blunt about insurance. "Avoid any complex financial products as well as the hungry agents who try to sell them to you," he writes. He recommends readers skip agents entirely, searching for insurance online through sites such as Term4Sale.
Insurance's image problem shows up in its sales results. In the past 30 years, the U.S. population has risen by 84 million while the number of individual life policies sold has plunged.
The industry has tried to make up for the drop in individual life policies by focusing on more-affluent customers and selling them annuities and other complex products, in addition to the staples of life and disability.
"Life insurers have been successfully responding to change for generations," said Jack Dolan, a spokesman for the American Council of Life Insurers. Dolan said the group's members are forward-looking, especially when it comes to new technology. "It helps explain why so many companies have been in business for more than 100 years," he said.
