UnumProvident spotlights life insurance

By Bruce Shutan



Who needs more life insurance: Batman or the Flintstones?



While the answer is obvious to benefit managers and brokers, a recent survey found that most of the more than 1,000 adults polled picked the wealthy bachelor also known as Bruce Wayne despite Fred and Wilma having to support Pebbles. The Life Insurance and Health Insurance Foundation for Education-sponsored survey also showed Spider-Man (an unmarried freelance photographer) edging out homemaker Marge Simpson. Some even thought Harry Potter could benefit from coverage he simply doesn't need as a student.



"This points out that people need to be educated on what to think about when they buy life insurance and who they're buying it for," says Joanne McInnis, director of group life product development for UnumProvident Corporation. Although amused by the findings, she can't help but point out "Americans are under-insured and while they recognize the need for more life insurance, they are at a loss as to where to turn for assistance."



The coverage gap



LIMRA International notes that virtually all of today's employers with more than 100 employees provide some form of basic life insurance. Despite the strong penetration of life plans, however, LIMRA says that participation of full-time employees has dropped dramatically in the last 10 years. The general state of affairs can be somewhat disturbing to employers that worry about being able to provide adequate protection. "Our enrollers time and time again tell us that most people they speak with are under-insured, and that these employees truly don't understand their financial vulnerability should a death occur," McInnis says.



These experiences reflect industry-leading research from LIMRA's Life Insurance Ownership Study, which dramatizes the nation's under-insurance problem. For example, 40% of those who already own some life insurance fear that they don't have enough coverage, and even one-third of households earning $100,000 or more in annual income recognize this need.



Part of the problem is that these households were found on average to own only enough life insurance to replace their income for 3.6 years, when the recommended rule of thumb is 5.7 years of income. This represents a $200,000 coverage gap.



The issue is most acute for the middle-income market - those 78 million people earning between $20,000 and $75,000 a year. In the past, these workers were most likely to discuss insurance needs over the kitchen table during a visit from an insurance adviser. Days of home visits are history, so UnumProvident seeks to improve benefits access for these individuals with both group and voluntary benefit products available through the workplace.



Personal touch



Because our financial needs change through different life phases, prospective policyholders run the risk of under- or over-estimating their needs under a cookie-cutter approach to benefits design. Today's workers are confused about life insurance options at the same time they need to become more self-reliant about their coverage, McInnis says.



This is why UnumProvident enrollers use a worksheet to walk applicants through several key areas that invariably will determine appropriate coverage levels. They include mortgage and car payments, college tuition, credit card debt, child or eldercare expenses, as well as how much income needs replacing and for how long.



"We provide a variety of tools that help people personalize the coverage for their needs," McInnis explains, noting how group and voluntary life insurance plans work in tandem with medical and disability benefits, as well as retirement savings vehicles.



Communication methods include face-to-face interaction with enrollers, which is the preferred method for personalizing important educational messages for voluntary benefits, employee meetings, which work best for baseline group coverage offerings, and online approaches that allow for additional educational tools and customization.



McInnis says one conundrum is persuading employee populations that live paycheck to paycheck to sign up for coverage when the dollars they earmark for all benefits coverage is so limited. On the other hand, the industry average annual price of just $100 for a term policy with $50,000 coverage becomes what she considers "a very affordable prospect."



Described another way, it may be the equivalent of just one hour's wage per week, according to Debbie Cecil, director of worksite life product development for UnumProvident Corporation. For example, industry premiums for universal whole life coverage average $6 to $8 a week. Other hot selling points may include the convenience of payroll deduction, benefits portability and underwriting that requires no physical exams. Depending on the employee participation, guaranteed underwriting is usually available.



Group term life insurance policies from UnumProvident include financial counseling services for surviving beneficiaries. The service offers objective financial planning and counseling at no cost upon the death of an insured employee or insured spouse. Beneficiaries also may receive support from employee assistance programs to deal with issues of grief and loss.



"Today's HR professionals want to make it as easy as possible for employees to sign up for coverage and to insure that the coverage is adequate for employee needs," McInnis observes. "The integration of supplemental life with base coverage is the easy, affordable solution."