While we have no particular interest in being pariahs, we certainly have received a good amount of admiration for holding the insurance and financial services industry accountable on its many foolish blunders. To be fair, it’s not as though this industry is unique and with an overabundance of missteps and such, we just happen to take up professional residency within this industry and care a lot for its prosperity. So when we find ourselves shaking out heads we find the need to wag the finger and encourage more professionalism, intelligence, creativity, etc.
And recently we’ve found ourselves clawing at our eyeballs over the industries approach to Valentine’s Day. And we’ve taken issue with the mecca of the life insurance industry’s advocacy groups, the Life Foundation.
I don’t believe it was the Life Foundation that ultimately came up with this slogan, but it’s certainly holds no reservations about obnoxiously abusing it as a marketing slogan. And it went way over the top last week with this little diddy that showed up on it’s Facebook page:
All joking about who on earth would surprise his or her sweetheart with news that instead of flowers, chocolates, and jewelry someone decided to buy life insurance on his or herself, I want to instead take particular issue with the marketing angle the Life Foundation is working here. And I’ll note that my beef is more with a systemic attitude that appears to afflict the Life Foundation and not just over one tiny anecdotal whoopsie.
The allusion here is that life insurance is a cheap and transient purchase that requires as little or less planning and thought than a Valentine’s Day gift. If that’s your approach to your own finances there’s a good chance your headed for a bad time and shame on the Life Foundation for promoting such silly carelessness.
There are going to be moments in one’s life when life insurance and financial products are not the most important consideration at that particular moment (gasp!). It’s fine, and we’re best to accept that notion and move on. Valentine’s Day need not be a time of the year when we try to push our products to the forefront of people’s mind in an embarrassing attempt to pitch our wares—there will be plenty of other opportunities.
Further, trying to compete with Hallmark, Lindt, and Zales over holiday brain-shelf-space is demeaning and rather tacky. Our products don’t go on sale for a reason, they are different and any attempt to promote them through holiday fervor confuses that fact.
Now let’s further drive home a second and, I believe, much more important point. This sort of marketing is unprofessional at best and unethical at worst. Why? Go back to the image. The marketing attempt to juxtapose Valentine’s Day spending habits with life insurance costs. But the costs quoted apply to a $250,000 death benefit on a 30 year old male, which by the way is incorrect. The cheapest 20 year term policy in the compulife database (by far the most comprehensive of any quoting service) finds the lowest rate from Banner at $155 per year and this assumes the applicant is approved Super Preferred (aka preferred best). If I assume standard rates (the much more likely scenario) my annual cost is $270 as cheapest. This is the sort of hyperbole marketing that annoys people and grabs life insurance agents a brokers a bad name.
But who one earth said that $250,000 of life insurance was a reasonable suggestion. If we take the mostly useless suggestion some financial advisors throw out there regarding adequate life insurance coverage at 10x annual earnings, then the life foundation is really only speaking to those who make about $25,000 per year. While that’s closer to the average American salary than most realize, the fact of the matter is life insurance is a very needs specific product that doesn’t follow a generalized application all that well. And this comes from someone who sells life insurance mostly for its cash accumulation benefit where I could simply tell everyone to place a certain amount of money into a policy and be done with it. Even with that somewhat approach customization is very much an integral part of what we do every day.
When you compete on price…
We all can fill in the blank about how it bites us in the posterior region. Life insurance does not need to be made to look cheap to be sold. Nor do we want to get into the habit of trying to convince people to buy it for that reason. Remember, unlike an overpriced diamond bracelet or box of chocolates, the commitment to paying life insurance premiums carries on for a large number of years. And when someone stops paying premiums prematurely, it can be bad news for both the insurance company and the agent/broker.
Trying to convince people that it is cheap to get them to buy only to have them later find out it’s more expensive than you suggested breads ill will we’re all better off without. Many television and communications companies have been pulling this stunt for years with teaser rates. It doesn’t make for happy customers, and there are far too many other options and as we know, many people are much more willing to purchase cable television than life insurance. So while cable television providers can probably get away with such a deceptive tactic, the life insurance industry almost certainly cannot.
Brandon launched the Insurance Pro Blog in July of 2011 as a project to de-mystify the life insurance industry. Brandon was born in Northern New England, and he currently calls VT home. He attended Syracuse University and graduated with a triple major in Economics, Public Administration, and Political Science.
IPB 105: Is Indexed Universal Life Insurance Worth it even if the Interest Rate Assumptions are Wrong?
IPB 104: You Can Just Buy Bonds: One of the Reasons Not to Buy Whole Life Insurance
Indexed Universal Life Insurance Pros and Cons
Life Insurance a Potential Hedge Against Sequence of Returns Risk