“Family isn’t the most important thing. It’s everything.” -Michael J. Fox. Family means a lot to people. They are the people that stay with you through the best and worst of times. Therefore, it’s normal to worry about what will happen to your family when you’re gone. It’s these worries that form the basis for life insurance.
We seldom talk about life insurance. However, it’s something that nearly every American deals with. Now, the hesitation people feel towards discussing anything related to death is natural. When comes to insurance, however, it’s necessary. Rather, it behooves people to learn as much as they can about life insurance and the regulations that affect it. Only informed and knowledgeable citizens can acquire the greatest benefits for their families.
For instance, many people are unaware that a major shift is soon to occur within the life insurance industry. This shift comes in the form of new regulation from the DOL (Department of Labor), which should change the entire industry for the better. Said regulation will impose new legal and ethical standards upon most insurance salesmen. Of course, in order to fully understand the impact of said regulation, we’ll first need to discuss how life insurance works. Only then will we be ready to discuss the changes and how they affect you.
Life Insurance Basics
Your choice in life insurance may decide the future of your family. It’s unpleasant, but true. Roughly 23% of all deaths in the USA occur between the ages of 25 and 64. No one ever expects it, but the future of your family might depend on how you planned for it. Therefore, it’s crucial that you understand the basics of life insurance.
Firstly, there are many different types of life insurance. Today, however, we’ll just talk about the three most popular types: Term, Whole Life, and Universal. Each of these types appeals to different people in different situations. As such, they all have very different benefits and drawbacks.
Term life insurance is a temporary policy. Usually, term life insurance policies will exist for a total of 10-20 years. These policies are by far the least expensive life insurance option. However, it’s important to note that life insurance prices increase exponentially as one gets older. Therefore, once your term insurance expires, you’ll find life insurance of any kind to be far more expensive.
Whole life insurance is the simplest kind of life insurance, and likely the one people are most familiar with. Whole life policies remain in effect for as long as an individual continues paying for them. The initial fees are more expensive than those of term-life insurance. However, these fees don’t change in price after the initial purchase of a policy. In addition, whole life policies have cash values that grow as the policy ages.
Universal life insurance is similar to whole life in most ways. Much like whole life, it is also permanent, and it possesses a cash value. However, unlike whole life, the purchaser of universal life can shift a certain amount of dollars around. Essentially, one can “borrow” some money from the death benefit by shifting it to the cash value.
These life insurance policies are the most common, but make no mistake, there are many others. Furthermore, each of these policies can be customized (in minor ways) for specific individuals. You may now wonder; how can insurance agents find the best policy for you out of so many others? Well, that’s part of what this new regulation changes.
The upcoming law known as the DOL Fiduciary law stands to elevate most insurance agents to the level of fiduciaries. Fiduciaries hold the highest level of financial responsibility, and are required to act in the best interest of their clients at all times. Some might wonder, “Don’t insurance agents already possess these responsibilities?” Unfortunately, this is not the case.
As it stands now, insurance agents are only required to provide you with a plan that can meet your needs. They are under no obligation to work harder to find the best plan for you. This new plan will change that, subjecting those agents caught taking the easy way to heavy penalties.
The future of life insurance
This new ruling stands to change the face of life insurance forever. The feeling behind this change in policy is to return us to the earlier days of life insurance, when people trusted firms to take good care of them. Hopefully, this law will bring a new era, where people once again feel safe and comfortable dealing with life insurance.
The life insurance industry needs to change the way they do business. Some companies make a more appropriate effort to develop positively while others don’t. Moreover, this industry is on the edge of a lot opportunities. Doug French and James O’Neill call this evolution “the creative destruction” or “a paradigm shift”.
Although many experts might know where things are going, let us analyze one possible outcome. Nowadays, business circulates around customer experience. Your clients will go somewhere else if you do not have what they desire. This applies for the life insurance industry as well as for other companies. Making sure that your customers are satisfied is very crucial. This is because digital products are popular among the 35 and under age group. These people make up a huge portion of digital consumers. As a result, insurance companies and agents should capture this group of clients. Digital products create a dependence on the online environment to conduct a great deal of business.
Future clients will transform the entire life insurance system. They will most likely be an online shopper. More than ever, customers are going to Google before purchasing anything. Modern day customers do not want to be sold anything. Nor interact with agents. They would prefer not speaking to an agent at all costs if possible. However, agents are helpful when asking questions. These clients just want to find facts about the product and purchase it. Future clients are going utilize their own research skills to investigate companies and products. Call centers, mobile, and the internet will all play a huge role in the future of the life insurance industry.