Monday, April 11, 2016

6 Reasons Employees Enroll in Permanent Life Insurance

When I talk with decision makers in many employer groups, there's often some discussion about whether or not employees have any interest in a permanent life insurance program. While it is true that not all employees are interested, there are many who are. Here are six reasons why employees want a permanent life insurance solution offered at work.

Reason #1 - Employees With Chronic Health Conditions Need Help Getting Approved For Life Insurance

The first reason that employees want permanent life insurance is due to the fact many of them have chronic medical conditions.

Chronic medical conditions are medical problems like:

  • Cancer
  • Diabetes
  • Hypertension (High blood pressure)
  • Stroke
  • Heart disease
  • Pulmonary conditions
  • Mental illness

If you deal with the health insurance renewal process for your company each year, then this should not come as a surprise. You already know that employees in your group have medical problems. Otherwise premiums for the company's group health insurance coverage wouldn't be skyrocketing.

But if you need additional statistical confirmation that your employees have chronic medical conditions, the National Health Council estimates that half of all adults have a chronic medical condition. Many have multiple chronic conditions. They also estimated that 75% of all health care costs are related to chronic medical conditions.

Here's the problem with chronic medical conditions. Employees who have them can't buy life insurance on their own. You have to be approved by the insurance company in order to buy life insurance. Many of these same employees would have to pay significantly more for life insurance or worse, be turned down.

Employees that have medical problems also are more likely to want permanent life insurance because they want something they own. They want to have control of it so no one can take it away from them.

You can help those employees get policies through your groups negotiating power to reduce or eliminate the underwriting requirements most employees have to go through to buy life insurance on their own.

Reason #2 - Most Employees Will Outlive Their Group Term Life Insurance

The second reason that employees want permanent life insurance is because group life insurance terminates someday. As much as you might try to work employees to death, it just doesn't happen. Even if employees do work until they die, the life insurance age reduction formula will usually reduce any group term life insurance.

Most basic group life insurance terminates when an employee leaves your employment. While supplemental term life insurance may be portable, employees rarely keep it. If they do keep it after they leave, it will terminate at some point. Either at a certain age or when the premiums get so expensive that the employee can't afford it anymore.

Insurance companies know that most employees will outlive their group term insurance. The average life expectancy of a person living in the United States is almost 79 years old.

Group term life isn't designed to last that long. This leaves employees without life insurance when they need it most - when they actually die.

Many employees want some permanent life insurance coverage that lasts into retirement to pay for expenses like their funeral.

Reason #3 - Employees Want Additional Coverage For Their Family Members

It's not unusual for employees to want coverage on family members. They want it for the same reasons they want life insurance for themselves. To provide a death benefit if the worst happens. Or maybe, they have a child with a medical problem and need help getting approved for a policy.

Often, older employees are put into a position where they are taking care of their grandchildren. While older employees might not want to get additional coverage for themselves, they know if the worst happens and a grandchild dies, they'll be responsible for paying for it. That means they'd be interested in buying life insurance for grandchildren.

Group term insurance does allow coverage for family but not usually without the employee buying coverage. Unless grandchildren have been adopted, they can't be covered under a group life policy.

Employees can cover those family members with permanent life insurance without the restrictions group plans put on them in order to do it.

Reason #4 - Employees Need Payroll Deduction To Keep Their Policies From Lapsing

A lot of employees have trouble keeping their policies in force because they don't do a good job of paying premiums on their own. In fact, an article on the Huffington Post describes the number of insurance policies that lapse as massive.

Because so many policies lapse, insurance companies just get to collect the premiums and get richer. For an employee with a chronic medical condition and a permanent life insurance policy, it's even more important to keep it in force.

Payroll deduction of the premiums help accomplish that and you have a lot of employees who really need that help.

Reason #5 - Employees Need A Life Insurance Agent To Talk To

According to LIMRA, a source of insurance industry statistics, eight in ten households don't have a life insurance agent. As a result, that same study by LIMRA, life insurance ownership is at it's lowest level in over 50 years. The reason is because agents just aren't calling on your employees like they used to.

But that's not all the LIMRA study revealed. There's more.

Sixty percent of baby boomers want to buy life insurance by speaking with someone face to face. Younger employees want to get help with life insurance at work.

You are in a unique position to help those employees get the personal attention and advice they want and need when you offer a permanent life insurance plan to your employees.

Reason #6 - Employees Want More Life Insurance

A 2015 Life Insurance Barometer Study by Life Happens and LIMRA found that nearly one third of American's believe they need more life insurance.

It's no coincidence then that there's a good chance that if you offered a permanent life insurance program that about a third of your employees would take advantage of it.

My 20 plus years experience is that 25-45% of your employees will participate in a permanent life insurance option when I offer it to them. That seems to back that statistic up.

That's because most Americans don't have plans to see an agent in the next 12 months. But when they do, the elect to buy additional life insurance on themselves or one their family members that they feel they need.


Those are my top six reasons that employees want permanent life insurance offered at work. As the employer, you have the ability to help your employees fill a need they want to take care of but don't know how to.

For me though, the most important reason is to help those employees who have chronic medical conditions get coverage that they couldn't otherwise get.

What are some of the reasons you can think of to offer permanent life insurance to your employees?

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Michael is a champion of guaranteed issue for employees in the workplace. He's been an insurance agent since 1992 and has worked with thousands of employees.