Gathering the uninsured
by Carolyn S. Ellis
L&HA Features Editor
Genworth Financial released its 2011 LifeJacket Study in March to show that an alarming percentage of Americans do not own life insurance. We spoke with Janet Deskins, Senior Vice President of Life Products, about Genworth’s efforts to educate consumers and assist agents and advisors to reach these uninsured and under-insured market segments. Janet was joined by Gregory Bucko, Director of Customer Innovation at Genworth Financial companies for our conversation.
L&HA: What were the major findings of the 2011 Genworth LifeJacket Study and were there any that surprised you?
GB: There were some really surprising findings. We found that only 49 percent of American adults have any life insurance at all, and 45% of married parents with children in the household had no life insurance. When we dove into particular segments, we found that 69 percent of single parents with children do not have life insurance. That seems like a segment that should have life insurance more than any other, and unfortunately they have much less. That was true across all income levels. I don’t think responsible parents would take their children on a boat without a lifejacket, and life insurance is a lot like that.
L&HA: Would you say contributing factors are insufficient income or lack of information?
GB: It’s both. We took a look at different income levels, including Main Street Americans that have a household income of $50,000 – $250,000. Those statistics were just as alarming. To build awareness, on our website www.genworth.com/life we have created a consumer tool that allows you to calculate your need quickly and see the monthly cost of that life insurance. A 35-year old male can get $1.3 million of coverage for $52/month. Our message is: A) life insurance doesn’t have to be complex; you just have to talk to a financial advisor and inform yourself, and B) it doesn’t have to be expensive.
JD: Our website also has a tool that allows you to look at your spending on a daily basis. If you make a few changes, like buying one less latte or bringing lunch to work once a week, you can see how that can impact the amount of life insurance you can purchase. That same 35-year old male, if he spent $6/week less on coffee or lunch, could spend $24 more monthly on life insurance. That’s an additional $500,000 of coverage for a healthy, 35-year-old male. You can get to $1 million in coverage very quickly. This is what we want to communicate to consumers.
L&HA: Is it practical for agents to serve this underinsured market?
JD: From a policy volume perspective, Genworth is the leader in the number of policies we issue a year in the independent channel. Our average face amount, depending on the product, could be anywhere from $120,000 to $380,000. Agents need to focus on the relationship. At Genworth we’re working from the bottom up, helping the producer with consumer education and making it as easy as we can to transact business. Our Life Quick Request system, in streamlining the application, allows the producer to do business in a fast, transactional process, and we continue to assist through both underwriting and policy issue.
GB: Any agent or advisor would agree that if someone comes to them with a need for life insurance, serving them should be a priority. When we talk about life insurance we aren’t talking about a once-and-done deal; we are talking about a journey. For instance, our 35-year-old male may be able to afford $250,000 of life insurance with his current budget. In a couple of years, he may have a new job, have paid off some debt, and have more income, so he can afford another $250,000 or $500,000 of coverage.
L&HA: Are you simplifying underwriting?
JD: We do full underwriting. We aren’t going down the path to simplify that many other insurers have chosen because there is a cost to the consumer. When you don’t ask for as much information, you are not going to be able to offer the best rate. We think it’s important to be as affordable as you can be.
L&HA: Will we see changes in product design and servicing?
JD: A year ago we introduced our Colony Term UL product which makes it affordable for folks to buy into insurance. You have the ability to pay a 10-, 20-, or 30-year level premium. When your income has grown, it allows you to step up to a higher level of premium. From a servicing perspective, we’re keeping our products as simple as we can so they're not a black box the policyholder doesn’t understand. We send annual reports to our policyholders so they can sit down with their agent and determine what else they might need.
GB: We found that people, especially younger generations, want to research life insurance online and even find an agent or advisor in their area online, but they still want to buy life insurance from a real person.
L&HA: What about employees with access to group insurance?
BG: There are many Americans who have only group life insurance, but it’s important for them to talk to a licensed insurance agent to see if their group policy will meet the needs of their family and how portable the plan is if they lose their job.
JD: With a financial advisor, they might see that if they’re willing to go through some underwriting and they’re healthy, an individual policy could cheaper than the group plan.
L&HA: Single parents are probably the busiest people on earth. Are we likely to see a Genworth desk at the grocery store?What’s next?
JD: Part of the puzzle is finding ways to reach consumers where they are during their day so you can educate them or get them focused. As an industry we have to think about these things.
GB: We plan to promote the genworth.com/life consumer website through print media and other PR forms. We find in our research that people whose parents had life insurance or a great relationship with a life insurance agent are more likely to have life insurance themselves. One of the things we are doing with the University of Virginia and our collaborator Dr. Gregory Fairchild is to continue to understand the ‘whys’.This first report that we issued in March is the ‘who’ of the under-insured. We want to get at the root causes. That research will come out in mid-summer. This problem isn't going to be solved overnight. We’ll be talking about this for years.
JD: We hope agents will see that this under-served market is a great opportunity to help the people that need life insurance the most.