Okay, maybe they don’t hate life insurance itself, but they sure do seem to hate paying for it. (Almost) everybody can think of better things to do with the premium. But isn’t that true with most bills? You may love your car, but that doesn’t mean you love your car payment. I have identified several contributing factors, although there are certainly many more.
The first is ignorance, and I don’t mean that in a negative way. The fact is, life insurance is complex, and few people have the time or inclination to really understand its nuances. The media don’t help, with their constant mischaracterizations and blatant untruths. Additionally, since (according to LIMRA*) fewer than 20% of new agents are still on the job after four years, that means that many people buy their life insurance from people who don’t fully understand the product themselves.
A second reason is that because it’s intangible, its value isn’t always fully recognized. The bills come like clockwork, but the reason(s) for buying it oftentimes fades. This is especially true when the agent who sold the policy is no longer available to review it.
Lastly, the industry itself, and agents in particular, have a tarnished reputation, not all of it undeserved. There are several reasons for this, but I believe this biggest one is that there are lower barriers to entry into the life insurance business than say accounting or law. The only legal requirement is a relatively easy insurance exam (and probably a prohibition of convicted felons sitting for the exam). As a result, less than ideal candidates are sometimes hired.
Some say that the commission structure is the crux of the problem, but I disagree. I believe that you either have integrity or you do not. If you do, the method of compensation will never be an issue and if you don’t, well let’s just say that some professionals have been known to pad their billable hours.
In reality, people should love life insurance. In all likelihood, they bought it out of their love of family. What would they do if it didn’t exist? They would either have to save every dollar they could in hopes of accumulating enough for their family, or would have to hope that the community would pitch in and care for their family (which is really just an informal and inexact form of life insurance).
So for those of you who actually read this, embrace your life insurance! You bought it for a reason. Review it to make sure that it is still doing the job you intended. Few things you do will have more importance.
*Life Insurance Management and Research Association