Consumers need more education about life insurance options

It should come as no surprise to those in the life insurance industry that consumers generally don't know what they need from life insurance. This unfortunate reality can be attributed to any number of issues, but one of the biggest is that they simply don't know or don't really understand the options that are available to them. Polls routinely show that consumers dramatically overestimate the cost of such coverage, and that is in no way unrelated to the general lack of information they may have about the plans.

The thing that people seem to misunderstand most about life insurance is that there are many different types of policies, not all of which are going to be right for their personal financial situations at any given time, according to a report from the Pocono Record. Jack Dolan, vice-president of media relations at the American Council of Life Insurers in Washington, D.C., told the newspaper that the needs of a person who is just starting a family are going to differ greatly from those with grown kids who are in the final stages of planning for their retirement, but that there are also different plans that may help them achieve their unique financial goals.

What does this mean for consumers?
People are perhaps right to be cautious when it comes to something they don't understand, in that they should always be careful to research everything about their options before they make the leap, the report said. This is a place where insurance agents can make a huge difference for even the wariest would-be buyer, because they can help people to find the exact type of coverage that's likely to work best for them in the near future and long-term simultaneously.

However, that's another thing consumers may not necessarily be ready to accept on the basis of, say, a cold call or even a referral in some cases, the report said. They may have to seek out agents instead, and this is likely to be key because first meetings could be the start of years-long relationships in which consumers slowly come to understand their coverage more intimately, and get a better idea of what they will get from their insurance, especially as their needs change.

Insurance agents help consumers better understand their life options.

What kind of coverage is right?
For this reason, the ability of agents to spell out the differences in various types of coverage, and how those might impact consumers, is vital, the report said. For instance, most people might not even know that term life insurance – which might be most beneficial to cost-conscious young adults who are just starting their own families – is an option for them, and agents who direct them toward that type of plan may enjoy significant success down the road.

Consumers who have a good understanding of the coverage options available to them and can make those choices work with their personal finances are generally going to be more satisfied with the plans they choose. That, in turn, is likely to engender better relationships with their agents and insurers going forward.