Alongside the Benefits Selling Expo, there's a meeting tailored for benefit product providers called the Voluntary Employee Benefit Board. One of the questions we discussed in a breakout session was something like: “Even though life insurance is certainly among the best known forms of financial protection, studies show that more than half of all people are underinsured, and more than 30 percent have no life insurance at all. What can we do as an industry to narrow the gap?”
I admit, I facetiously suggested a federal government mandate, but then we got down to serious discussions. We came up with several suggestions, including illustrating why life insurance is important through real-life examples; online needs finders and analysis tools; and informational campaigns to associates in existing accounts.
One thought is that increased emphasis on life insurance may be needed just because it's so familiar. (We may take it for granted.)
Part of the issue, of course, is that unless we ask for it, in our culture we are very resistant to well-intentioned advice. Telling people “you need to consider buying more life insurance” is the type of advice we ignore. If we all listened to advice of this type, we would exercise more, eat a healthy diet and drop our bad habits.
One possible method of breaking through this resistance barrier is to use social benchmarking norms aimed at specific demographics. Studies have shown that behavior modification can be successful when social norms are used to help people identify themselves with a positively perceived group.
In an article in the Harvard Business Review, author Steve Martin discusses successful uses of social norms in changing behavior in areas like paying taxes and showing up for medical appointments.
A variation of this is the way Amazon has famously sold people like me books, movies and music. After I buy an item, I'm always reminded that people like me also bought another similar item. Perhaps our strategy to promote voluntary enrollment in life insurance should focus on how active employees buy life insurance as well as how their beneficiaries will use the proceeds. After all, it's buying behavior we need to influence, not spending behavior.
Finally, for the voluntary benefits industry it's worthwhile to address this situation. LIMRA's research shows the reasons people don't buy life insurance include competing financial priorities and because they think they can't afford it. Since voluntary life products can be readily available—and affordable—at work, we have a great opportunity to deliver coverage to a market in need.
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