Life Insurance & Disability
Driving Home the Need for Life and Disability Insurance
by Nicholas Brecker

Picture a mixed media art piece in red, blues, and black. It evokes widely divergent emotions of love, sadness, and confusion. These themes were omnipresent in the collages consumers created as part of a focus group convened by LIMRA International. The collages express their feelings about a subject that, on the surface, wouldnีt seem to stir such deep conflict -- life insurance.
Most Americans are familiar with automobile insurance because they are required to have it and many are familiar with health insurance, particularly if they have benefits through their job. But, a large segment of society is completely in the dark about life and disability insurance.

According to a LIMRA survey, 30% of respondents had no life insurance. People in 48 million American households are uninsured or feel underinsured. This is despite the fact that 75% of Americans believe that life insurance is the best protection against the loss of the primary income earner.
The numbers are equally disconcerting for disability coverage. According to the Consumer Federation of America, 82% of American workers have no disability coverage or they say that their coverage is inadequate.
Such avoidance is dangerous. Middle-class and even upper-middle-class families are entrenched in serious financial obligations, such as mortgages, car payments, and college tuition. Having two incomes is a necessity for most and even a small financial disruption could prove disastrous.

There is usually strong market support for a product if people see it as vitally important. Yet, disability and life insurance products aren't enjoying consistent sales success even with premiums staying relatively level for the first time in several years. This disconnect may spring from the fact that, for many people, acknowledging the need for life and disability insurance is the same as facing their own mortality or the prospect of not being financially independent. The harsh reality is that failing to plan for these possibilities could leave remaining family members far worse off.

Employers are in the ideal position to help. Most firms already provide health coverage, and many offer life and disability insurance packages as well. Employers can enhance their benefit programs by providing additional employer paid coverage or voluntary, employee paid benefits. Payments can be incorporated easily into straightforward payroll deductions. Also, employees can get added savings by purchasing insurance through their employer.
Smaller businesses are looking for ways to entice and retain the best employees and they can get the edge they seek by adding options, such as life and disability insurance and offering resources to educate employees on these benefits.
Insurance brokers should include expanded life and disability insurance options in insurance packages and human resources managers are well placed to help introduce these types of benefit packages to employees. In addition, straightforward and simple information can give employers and human resource professionals the tools to provide life and disability insurance options. People may be more receptive to exploring life and disability insurance when they review these options along with other insurance information

Life and disability insurance has evolved considerably in recent decades. Benefits are no longer payable only upon the death of the insured. Current plans tend to include comprehensive benefits that ease additional financial burdens in the case of death or sudden catastrophic disability. They are designed with the understanding that many consumers donีt want to think about death or disability.
For example, some insurance products cover tuition expenses up to $3,000 per year for four years for the children of policyholders. This benefit is extended to children who are within 12 months of enrolling in college at the time of the death or disability of their covered parent. Another benefit offers legal, financial, and mental health counseling services as part of a life insurance benefit program. It allows the member and their family to access some benefits when they need extra help.

Customers must be encouraged to make a full assessment of their financial needs. Many insurance carriers offer worksheets to help people think through this process and come up with a well-informed coverage plan. People need guidance on how much coverage to purchase. Many families need coverage to replace 60% to 80% of lost income. It depends on what income a family needs to maintain its standard of living in the event of a death or loss of earning ability. Often, people do not think this through. They may need coverage to pay for funeral expenses, rent, or mortgage payments, vehicle costs, credit cards bills, tuition, insurance (home, medical, auto, etc.) premiums, and a host of other expenses over many years.

Americans already know that life and disability insurance are necessities. The key is to get people talking so that they feel comfortable addressing the topic. Once the subject has been demystified and people feel informed, they are ready to take the next step to get adequate life and disability coverage for themselves and their families.

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Nicholas Brecker is president of WellPointีs Life and Disability business and the companyีs Blue Cross of California affiliate, BC Life & Health Insurance Company. Since joining WellPoint in 2003, he expanded the companyีs distribution organization; enhanced the product portfolio; and lead WellPointีs initiative to improve health and productivity.
Previously, He was a senior vice president with ABD Insurance and Financial Service and president of its broker/dealer. He also spent 19 years with MetLife. He received his bachelorีs degree in business economics from the University of California, Santa Barbara. For more information, call 818-234-4148.