A basic principle of human nature is that to get someone to do something, you must make it easy for him/her. This holds true across a wide range of activities, from paying taxes to enrolling in savings plans to buying life insurance.
The government understands that it would be pure folly to just bill taxpayers at the end of the year for their tax obligation. They wouldn’t collect a fraction of the taxes owed with that method, so they mandate that employers withhold and remit taxes each pay period. In addition to being good for the government, it is easier for employees than trying to save it on their own.
Recent legislation (well, it’s over ten years old now) allows employers to automatically enroll new employees in their 401(k) plan unless the employee specifically opts out in writing. As a result, participation in company sponsored retirement plans is at an all-time high.
One employer I work with on their retirement plan doesn’t want to use the automatic enrollment feature because they experience a rather high turnover, and former employees’ qualified balances can present an administrative burden and cost.
To get around that, I counsel new employees who are interested in saving to start small, and some start as small as 1%. I don’t care how stretched your budget is, it is highly improbable that you will feel 1%. I then have them sign up to authorize an additional 1% increase twice a year, on January 1st and July 1st, which will remain in effect until they reach 15% or until they revoke the election. This has proven to be very successful, and there’s no reason you can’t implement a similar tactic at your company.
While it is generally not an easy process to buy life insurance, the insurers have made it easier to pay for it. Virtually all companies will electronically debit your checking account for the monthly premium, several also offer the option to automatically bill your credit card.
Many insurers are trying to make the buying process easier by waiving certain requirements in specific situations. While that makes the buying process easier, it tends to increase the premium, as the insurer must reserve a little extra for the maladies that their expedited process fails to discern. A fully underwritten policy will still produce the lowest possible premium.
So yes, buying a policy to protect one’s loved ones will entail a certain degree of inconvenience. But not nearly the amount of inconvenience the loved ones stand to suffer if the policy isn’t bought.
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