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Life insurance is too complicated and expensive

It’s always difficult to sell a product when it depends on thinking about death. No one really wants to think about their own death or how it will affect those who depend on him or her. It’s good to believe we are all rational and can look past the sadness, but many resist it. Given the collapse in the world’s economy a few years back and our difficult path back from recession, every cent in our household budget has become very precious. That cent could be used to pay down our debts or to pay in cash to prevent us increasing the debt. So when it comes to insurance. . . Well, if we are not subject to a mandate, we put it off. In the current financial climate, the average insurance premium rates are too high.

To fight this, the insurance industry should make some real changes. This would start by developing new products that will appeal to the average household. Too often, policies are defined to appeal to the wealthy who have more to protect and enough in assets to make the use of insurance a good way of passing the value down to the next generation. The average family has little savings and not much in property so the more sophisticated policies are redundant. There’s also considerable evidence the ordinary consumer finds the wording of policies difficult to understand. This is not a problem when the family can afford the services of top-class attorneys and accountants. But a simpler life insurance policy in ordinary English would sell more easily.

Finally, insurance companies should make it easier to buy policies online. This insistence on face-to-face interviews with agents is great when it comes to paying them commission and so making the policies inherently more expensive, but it’s resented by the average buyer. Most people want a jargon-free product with the minimum of profit margins built in for the insurer that pays out enough to cover immediate needs. That’s cheap life insurance for the masses and not simply a way of taking money to fund an agent’s good lifestyle.

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