Myths that keep consumers from seeking life insurance coverage

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The goal of Life Insurance Awareness Month is to educate consumers about the importance of life insurance and the role it plays in protecting a family’s financial future.

According to LIMRA, 30 million American households are underinsured and another 30 million have no life insurance coverage. If a senior employee dies unexpectedly, it could create real hardship for the left-behind family.

So how can we help close this gap in coverage? I think it comes down to awareness and accessibility.

Sensitization

Today, the prospect of losing a loved one is more real than ever, as more than 4 million families have lost a limb to COVID-19.

In fact, LIMRA research shows that 6 in 10 Americans have reported increased awareness of the importance of life insurance due to COVID-19. And 7 in 10 Americans agreed the pandemic was a wake-up call to reassess their long-term financial goals.

Misconceptions about life insurance can discourage individuals and families from purchasing policies. Here are some misconceptions – and realities – that we see on a regular basis.

False idea: The blanket is too expensive.

Reality: Premiums vary widely depending on the type of policy, the length of coverage and the level of benefits. But with the help of a financial professional, individuals can sort through the options to find an affordable policy that’s right for them.

False idea: The terms of the policy are too rigid.

Reality: Individuals can choose from a wide range of options to meet their needs based on their particular financial situation. For example, term policies allow consumers to choose the time horizon and amount of coverage they want, while other types of policies, such as universal life insurance, allow customers to determine when and when. amount of premiums.

False idea: The application and approval process is complicated.

Reality: Applying for life insurance is much easier and simpler than ever before. New technologies often simplify and shorten the process. In many cases, applications can be submitted online and some do not require a medical examination.

False idea: The value of life insurance is limited to the death benefit.

Reality: Many permanent life insurance policies, including indexed universal life insurance, allow an accumulation of cash value that can be used for a variety of purposes, such as paying for college, a wedding, or an emergency loan. . Some contracts can also be used as a source of supplemental retirement income (with appropriate structuring of loans and withdrawals) or to fund child care costs.

Accessibility

The work life insurers do to digitize processes is important because it will increase accessibility. This will make it easier and faster to set up life insurance protection. The pandemic and the current environment have accelerated some progress and some adaptation across the life insurance industry.

Technology allows industry to streamline efficiency by making backend processes faster and easier. This allows for a more streamlined experience, which helps improve consumer relationships and ultimately the experience. As technology continues to accelerate, we will see even more changes on the horizon that will transform the insurance industry. If properly designed and used, using today’s technological tools to build and nurture personal relationships with consumers will provide a competitive advantage and further help close the protection gap.

The life insurance industry plays a vital role for families and individuals and, through education, consumers can better understand the value that coverage can offer. And September being Life Insurance Awareness Month, it’s an opportunity to help consumers understand the importance of life insurance and how it can protect a family’s financial future. – helping them to become more aware so that they can really prepare.

Tim Heslin is president of US life insurance AIG Life & Retirement. He can be contacted at [email protected].

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