Local Voices
Illinois Banks Could Be Next Best Source for Life Insurance Sales
By Darcy Kleman
I'll never forget reading of the tragedy a few years ago where a young man from Villa Park was drowned in a terrible accident when his kayak was attacked and overturned by an adult swan.
The victim, a man in his late 30s, left a wife and two young daughters. Besides the horror of the story I was struck by a message at the bottom of the news article … he didn't have life insurance and a memorial fund was established to help his family.
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Unfortunately, tragedy does strike and often it strikes people who don't have adequate insurance. And while many well know “brand” life insurance companies are in the business of selling insurance, all too often I have found they are not necessarily focused on protecting middle income families.
Seems to me there are two reasons why people don't buy life insurance; either they have competing financial priorities or they think they can't afford it. However, regarding the second reason, a recent study by LIMRA, the international life insurance research organization, found that consumers typically overestimate the cost of life insurance by as much as threefold.
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Basic economics are part of the reason why purchases of goods or services, not seen as essential, are lagging. Some 64 percent of households have emergency funds, down from 71 percent in 2010, and a divide remains along incomes. More than 80 percent of households earning over $50,000 are spending less than they earn while only about 69 percent of households making less than $50,000 have more income than they do bills.
To make matters worse, six in ten consumers don’t recall being approached to buy life insurance in the last two years. This is particularly true for middle income families. And, of those who were approached, the 35 percent who didn't buy at the first encounter said their sales representative failed to follow up with them.
But if the traditional life insurance industry does not appear to be having an impact on middle income families, there is growing interest to provide this service right in your local bank. Half of Generation X consumers and 55 percent of Generation Y consumers would consider buying a life insurance policy from their bank, according to a new report from LIMRA
While bank sales of life insurance may still be considered a small percentage of the overall, according to the LIMRA report, that dynamic is slowly but surely changing.
But, typically, the bank isn’t going to chase after you as would a more traditional life insurance agent. Banks tend to be service, rather than sales, oriented.
That means the middle income consumer must take the initiative. It’s a matter of protection. Just as we require our children to wear seat belts for their protection, heads of households should be sure they have sufficient life insurance for protecting the financial well-being of their families as well.
Meanwhile, industry experts note that independent producers and affiliated agents still dominate individual life insurance sales, each with more than 40 percent shares as of 2011. But life insurance sales made by financial institutions and direct sales have increased significantly over time, from just 2 percent in 1983 to 12 percent in 2011. Increased awareness by bank customers has led to this increase.
Try as we might, it is impossible to completely protect ourselves from all the potential tragedies that exist in life. But with the help of a licensed agent at your local bank, we can at least rest easy that our families will be financially protected if the unforeseen occurs.
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Darcy Kleman is Business Development Manager at the Schaumburg, Ill., office of Vantis Life Insurance Co. She can be reached at dkleman@vantislife.com or at 312-802-1939.