If we are to believe the tech mongers, the only thing separating legions of consumers from sufficient life insurance coverage for their families and businesses is ubiquitous access to the product. To them, technology – robo-advisors, is the obvious answer. These self same sorts will tell you that the idea that life insurance has to be sold and is solely a function of that same access issue.
Or is it? Life insurance has been available in many self-serve ways for years: optional group life coverage at work, association group coverage, TV offers, credit card options and others. Yet, few advisors run into many people who are all topped up with coverage based on their own initiative. How many families still use those ten terrible words at the end of an obituary? “A trust fund has been set up for the children”. This is what happens when consumers are left to their own devices. LIMRA say that only 2% of life insurance sales are self-initiated.
Mark Twain said, “there are lies, damned lies and statistics” so let’s not put too much faith in the numbers. Instead, let’s look at the real reasons life insurance is rarely a successful DIY project. They are more human than robotic.
First of all, few people like to talk about death, let alone their own. Personal death is one of the two greatest fears experienced by the general public. Death and public speaking. Rarely does the topic of death and life insurance come up in polite company – public speaking about death. As a result, few but the most sensible give the idea more than a passing thought. This is reasonable. Life is challenging enough without pondering devastating, indefinitely timed future events.
Tied to the fear of death and death talking is superstition. Many cultures and many people without cultural influence believe that simply talking about death will hasten its appearance. Consequently, talking about the purchase of insurance over the kitchen table after the kids go to sleep just doesn’t happen enough to make it a viable solution to the insurance gap.
Many buy into the myth that when you have enough money, you don’t need life insurance. So, wealth increases some mistakenly believe that their needs fall when in fact they increase. After all, who buys the multi-million dollar policies and premiums? Silly poor people? No. The biggest policies are purchased by the wealthy with access to the best legal, accounting, tax and estate planning advice available.