It's widely acknowledged that Americans don't know enough about their life insurance needs and therefore don't take action when it comes to shopping for and obtaining coverage.
This is just one reason why it's important for employers to start offering their employees group life insurance policies that can get the ball rolling on ensuring workers have the coverage they need. While it's vital to stress that this type of coverage is by no means adequate as an end-all, be-all to employees' life insurance strategies, it's at least a good jumping-off point.
Employees seem to recognize this reality as well. A recent Harris Poll for OneAmerica found that while only a little more than a quarter of workers are enrolled in voluntary group life insurance policies through work, almost 3 in 5 would like to be. The most common reason why they're not is simple: Their employers don't offer it.
Needs and demographics
Those in the 28% of respondents who do have such coverage largely say it offers them peace of mind, but many also noted that they like being able to protect their loved ones from financial difficulties, including paying off debts or covering final expenses or to replace income.
Interestingly, the workers most likely to have this kind of life insurance are also those who are typically underserved by other aspects of the life insurance industry, the poll found. Workers between 18 and 34 years old were most likely to have group coverage through an employer, followed closely by those in the 35 to 44 range. However, respondents with incomes of between $75,000 and $99,999 - of which more than a third had group insurance - were twice as likely to be covered as those making less than $50,000.
Dealing with the hurdles
Of course, when it comes to getting employees signed up, there's often a gap between stated need and desire and actually following through. A MetLife survey recently found nearly half of employees don't like to think about enrolling in workplace benefits versus asking for a raise, and like it roughly as much as they like renewing their driver's license. In fact, more than 1 in 3 said they'd rather talk about their weight than discuss benefits.
To that end, approximately 1 in 5 workers only spend a few minutes reviewing their benefits offerings at all. Often, this is because they don't really understand what's being offered or the kind of value it might provide to them. For instance, about one-third of those polled said they didn't know whether they can claim disability insurance for a mental illness that renders them unable to work, and 20% said the only reason to get group life insurance through work is to cover funeral expenses.
For that reason, it's critical that life insurers and employers do a better job of explaining the value of these benefits and generally do more to engage workers as it pertains to understanding the full value of all benefits being offered.
This all comes as a separate survey from Unum found nearly 2 in 5 people say their ability to handle their finances overall is "average" or worse, and more consequently don't have a life insurance policy of any kind, or don't even know if they have one. That's despite the fact that more than a third rated the financial fallout of an unexpected death as a primary cause of their anxiety - and almost as many felt their families would feel the financial impact of that death within a single month of their passing.
Moreover, to highlight just how much the gap may be between understanding the value of life insurance and understanding how much coverage they actually need, 34% of those surveyed said they would probably only need one or two times their present annual income to insulate their families from that risk. The general rule of thumb is actually about 10 times a breadwinner's current salary.
The heart of the matter
As usual, outside simply not being offered policies through work, misapprehension about how life insurance works is among the top causes for people not being enrolled in life insurance at all. A Bestow survey of consumers without coverage in early 2019 found almost 3 in 5 think life insurance would be too difficult for them to afford, while 43% said the process of obtaining it was too slow for them, and 35% said they didn't need it at all. More concerning: 24% didn't have coverage simply because they didn't know how to apply for it in the first place.
The poll also found almost three-quarters of respondents felt affordable life insurance options would lead them to apply.
The good news is employer-sponsored coverage is usually extremely inexpensive for individuals - and can even be free if employers pick up the whole tab. That can at least begin a longer and more in-depth conversation about the utility and value of life insurance, as well as the need people actually have for it. Given that many people already want such coverage, this should be a slam dunk for any employer to pursue.