Americans remain dramatically uninsured—and underinsured—for life insurance. In fact, life insurance ownership is at an all-time low. A startling 41 percent of U.S. adults have no life insurance at all, according to recent LIMRA data, and 43 percent of those who have coverage admit it's not enough.

Both men and women are less likely to own life insurance today than they were in 2004. The odds of not having life insurance have increased dramatically for every age group since that time, and only one in 10 insured adults owns both permanent and term life insurance—half as many as in 2004.

This creates a nation of families who could be on the brink of financial ruin if a primary wage-earner dies. For example, of the households that own life insurance, seven in 10 have only enough to replace their household income for 3.5 years.

The general rule of thumb is to carry enough life insurance to replace income for seven to 10 years. For those fortunate enough to have employer-provided life insurance, many assume the relatively small amount of coverage it offers will be adequate for their needs, when in reality it often will pay for little more than final expenses.

Tally up the ongoing costs of mortgage payments, utilities, food, transportation, health care, clothing and all the daily necessities of life—not to mention longer-term expenses such as children's college education—and you'll quickly see the gap in coverage.

Those without life protection are obviously at even greater risk, especially since 61 percent of American workers live paycheck to paycheck, and 34 percent of households admit they would immediately have trouble meeting everyday living expenses if a primary wage earner died today.

Why don't they buy?

Consumers are likely to delay the purchase of additional insurance because they have other financial priorities right now or feel they can't afford it. High unemployment, reduced household income and increases in daily living expenses have caused many people to postpone their financial decisions.

They're not sure how to fit insurance premiums into their budgets on top of other priorities demanding their attention, a frighteningly short-sighted viewpoint.

But one of the main reasons people don't buy life insurance is lack of knowledge. Many people put off buying life insurance because they simply lack the knowledge to make an informed purchasing decision.

They don't understand what type of coverage to buy or how much they need. And when consumers don't understand their choices—especially the type of coverage they need for their own personal situations—they're not likely to buy.

In fact, of those who say they need life insurance, 44 percent say they haven't bought any because they don't know how much they need. And employers agree: Only 41 percent of employers in a recent survey said their employees understand the need for life insurance coverage very well.

Life insurance isn't bought…

Clearly, there's a significant education gap when it comes to life insurance needs. And the worksite is the ideal place to talk about it. Insurance at the workplace is attractive to most consumers because of its reasonable cost. The majority of employees prefer face-to-face interaction with an insurance or financial professional when purchasing insurance.

Of course, employers in today's economy aren't going to add to their benefits costs by increasing the life coverage they offer or by paying for fee-based benefits communication services. But they easily can make this vital financial protection and customized benefits education available to their employees at no cost to the business through voluntary life insurance.         

A top voluntary benefits carrier will offer one-to-one counseling as part of its enrollment services at no charge. The carrier's benefits counselors can help employees understand their benefits choices—both core benefits and supplemental coverage, including voluntary life insurance. 

Most employers—and likely you, as well—don't have the resources to meet with every employee individually and explain the choices. And there's no need to incur additional expense paying an enrollment firm to do this when a voluntary insurance carrier will do it for you.

Personal benefits counseling delivered in one-to-one meetings can really make a difference. Surveys by Colonial Life of more than 15,000 employees who met individually with benefits counselors during their enrollments prove the effectiveness of the one-to-one method.

Virtually all employees (97 percent) surveyed say personal benefits counseling improved their understanding of their benefits and that this type of communication is important (98 percent). Employers also find value in one-to-one benefits counseling. Almost 60 percent of employers believe personal benefits counseling sessions can strongly improve employees' understanding of their benefits and their coverage needs.

So what's the message?

So how can you put this to work for your clients—and your business? Here are a few tips to keep in mind.

Recommend voluntary insurance. Voluntary coverage is selected and paid for by employees. Employees choose the coverage type and amount that meets their needs and pay for it through convenient payroll deduction. There's no direct cost to the employer. Employees gain access to less expensive insurance than they could get on their own, which benefits them not only financially, but increases morale, satisfaction and productivity.

Choose your partner carefully. Not all benefits carriers are created equal. Be sure the partner you entrust with your business has a strong needs-sell philosophy that focuses on helping employees identify and meet their individual gaps. As I said earlier, life insurance isn't about selling. It's about communicating. Those in our industry who claim commissioned enrollers don't have this mindset have simply been working with the wrong companies.

Make it part of the annual benefits enrollment. Many consumers procrastinate and won't proactively seek out insurance until they need it and it's too late. Half of those likely to buy life insurance in the next year say they just “haven't gotten around to it,” and more than a third of these consumers say they haven't bought life insurance because no one has contacted them.

Include different types of life coverage in your portfolio. Whole life, universal life and term life products have different features and work best in different situations. So do individual and group policies. Ask your clients to make several options available so employees can select the most appropriate coverage they can afford. For example, group term life insurance is typically a lower-cost option that's simple to explain and understand. Guaranteed issue coverage usually is available, even for smaller groups. Some newer versions include options that offer additional coverage for travel, catastrophic events or other special situations. 

After major medical coverage, life insurance is probably the single most important financial protection benefit everyone needs—and every employer should offer. With voluntary life insurance products in your portfolio and an effective communication strategy in place, you can build your sales and help your clients offer the basic protection every American worker needs. 

Steven Johnson is assistant vice president-life and disability products at Colonial Life. He can be reached at (803) 678-6599 or [email protected]