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Stafford Thompson Jr. Credit: Lincoln Financial

Life Health > Life Insurance

You Have Gaps to Close

By Allison Bell

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What You Need to Know

  • Thompson sees consumers facing gaps in life insurance and retirement savings at the same time.
  • Too often, he says, neither the life insurance need nor the retirement savings need is addressed.
  • Insurers should work with people in underserved communities to maximize retention of policies already in force, he said.

Lincoln Financial’s Stafford Thompson Jr. wants you to think about both retirement needs and life insurance.

Stafford Thompson Jr. hopes agents and advisors will observe Life Insurance Awareness Month by helping members of underserved communities get the coverage they need.

The outreach campaign started Sept. 1 and ends Saturday.

Thompson, senior vice president of life and executive benefits business management at Lincoln Financial Group, points to survey data from LIMRA and Life Happens showing that 34% of Black U.S. adults and 39% of Hispanic U.S. adults need life insurance and do not have it; about 25% of white adults have that kind of coverage gap.

Thompson recently wrote a blog post for Lincoln Financial about the need for insurers to do more to reach out to consumers in underserved communities, and to work with them to maximize retention of policies already in force.

He also wrote about the need for consumers in underserved communities to take responsibility for their coverage.

“Consumers should prioritize life insurance the way they do health insurance and rent because of the protection and wealth management opportunities life insurance offers,” Thompson wrote.

Via email, Thompson answered questions about what agents and advisors can do to close the coverage gap. The answers have been edited.

THINKADVISOR: Given that annuities are hot now, how do you persuade agents and advisors to think about life insurance?

STAFFORD THOMPSON JR.: It’s really not about one or the other. It’s about what the consumer needs.

Annuities and life insurance often fulfill different consumer needs, and so, when we’re selling life insurance, we focus on what’s best for the consumer.

If the consumer need is best met by an annuity, we sell an annuity. If life insurance is the better option, then we sell them life insurance.

But we’re very focused on making sure we understand the consumer’s needs and goals, so we can identify the right products to get them there.

How does the savings gap in underserved communities compare with the life insurance gap?

I do think there’s a gap in the utilization of 401(k) and 403(b) retirement plans in underserved communities.

Not enough people understand the value of these benefits or of company matching, so we see a gap there for underserved communities.

Why do you think the gaps exist, and persist?

I think a lot of the gap is a result of exposure: Whether or not you were exposed to these products, and whether these types of financial conversations are held in the household.

I think another part of the gap is about prioritization. Even if people are aware of these products, are they prioritizing them in a way that protects their families and meets their needs?

Certainly, income, net worth and things like that have an impact on how much these products are utilized, but the truth of the matter is that much of the gap comes from a lack of any utilization altogether.

How do you think efforts to close the life insurance gap could affect any retirement planning and annuity gaps that you see?

I don’t know that I believe both gaps need to be addressed together — life insurance and retirement planning — but, again, I think our challenge is that, far too often, neither gap is being addressed.

Life insurance is certainly not only a wealth-building tool but a wealth-transfer tool, whereas retirement planning tends to focus specifically on better quality of life in retirement.

So, again, it goes back to the very distinct needs of the consumer.

But gaps do exist in both, and both need to be addressed.

What can agents and advisors do to reach workers who may be in danger of letting voluntary coverage purchased at the workplace lapse?

In the same way people need to prioritize getting life insurance, they need to prioritize keeping it. That’s a message that agents and advisors should be sharing with their clients.

It’s important for agents and customers to review clients’ policies annually, to ensure that the policies still meet the clients’ needs and that those needs haven’t changed.

Pictured: Stafford Thompson Jr. Credit: Lincoln Financial

Allison Bell

Think_Allison

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