Members Overestimate Cost of Life/AD&D and Underestimate the Need

And 3 Ways to Change That

By Kevin Cummer, TruStage® Product Manager, CUNA Mutual Group

Here’s a fact that might surprise you: Nearly half of U.S. adults—46%—don’t have life insurance.[1] And many don’t have accidental death and dismemberment (AD&D) protection, which can either complement a life insurance policy or be an alternative resource depending on a member’s family and financial situation.  

These stats mean many of your credit union's members don't have the critical coverage that could protect the financial wellbeing of themselves or their loved ones, in the event of a tragic injury or death. What could happen to members who are already struggling with the uncertainty and financial stress of the pandemic if they were to lose their household’s primary source of income?

Why don’t members have these types of protection?

Misperceptions are common. For instance, consumers tend to overestimate the cost of life insurance—half of them think life insurance is three times more expensive than it actually is.[2]

Many worry they’ll have to pass a medical exam and fear they’ll fail. Others find the product and industry terminology confusing and overwhelming.

When it comes to AD&D coverage, people tend to underestimate their risk. Many believe AD&D is only important for someone with a physically dangerous job—and with 71% of all non-farm payroll employees in the service sector, most don’t fall into this category.[3] They might be inclined to reconsider if they knew there’s been a 99% jump in injury-related casualties over the last 27 years[4] and that accidents are the top cause of death for people aged 25-44.[5]

In both cases, it could be a matter of avoiding unpleasant topics: Who wants to acknowledge the possibility of dying or being seriously hurt?

Three ways to drive member uptake and meet a critical member need

Here’s how you can help members understand why these types of protection are critical and why your credit union is their best resource.

1. Educate members through every channel. As discussed above, members likely have a range of concerns and misunderstandings about life and AD&D insurance. Use every channel possible—direct mail, web, mobile, social media and licensed call centers—to help set the record straight.

2. Deliver the protection they need. No one product will meet the needs of every member. Do the following to help the broadest range of members get critical coverage:

• Make both life and AD&D insurance available. Some members will benefit from life insurance, some will find AD&D a better fit and there could even be some members with reasons to opt for both. Look for a provider that can deliver both types of protection. This makes it easier for members to compare the features and benefits of both products and will mean one less vendor relationship for your credit union to manage.
• Deliver access to coverage at a variety of price points. Member budgets will vary widely, so select products that can easily meet a broad range of needs. The ideal partner will incorporate a quote tool into their digital offerings so members can investigate costs on their own. A quote tool lets members avoid uncomfortable budget conversations and makes it easy for them to experiment with different payment levels.
• Choose an AD&D provider with living benefit riders and anywhere/anytime protection. Not all AD&D providers are created equal and these are two important differentiators. The best ones have available living benefit riders that pay out at diagnosis, not death, and offer a variety of protection options—look for those that cover common illnesses like stroke, cancer and heart attacks. And also choose coverage that protects members at home and work, on vacation and while they’re traveling.
• Find a provider with a history of payment flexibility in challenging times. This past year has shown that life can change quickly. Members who are faced with a job loss, illness or unexpected expenses might think they have no choice but to drop critical coverage. Choose a partner that can show they’ll work with members in difficult situations.

3. Provide a hassle-free, member-centric process. Members have a variety of concerns and misconceptions about these types of insurance. To help alleviate their worries, choose a provider that offers the following:

• Product education through a range of channels. Some members will easily navigate a completely digital process; others will want help at every step. And still others may start online but like having the option of being able to reach out to a live person for help. Look for a provider that can meet every member’s needs.
• A no-exam process. Doctor’s appointments and medical tests are a pain point for many. The best providers won’t require either for insurance approval.
• Instant approval. When a member needs protection, they don’t need the stress of waiting for days or weeks for an answer. Instant decisioning is a critical must-have.
• A seamless digital experience—from initial research through claims servicing. The majority of your members will prefer to rely on digital channels for some if not every step in their insurance journey.
• A call center staffed by licensed reps. When a member reaches out to a call center, they expect the person on the other line to know their stuff and be able to answer most if not all of their questions. Choose a resource whose call center staff are more than order takers.

Life insurance and AD&D can deliver critical peace of mind to your members. Now, perhaps more than any time in recent years, it’s critical to ensure they have access to affordable, member-centric coverage. With the right partner, you’ll be able to provide the member-first protection and process they need.

For more information on TruStage® Life and AD&D Insurance, visit: https://www.cunamutual.com/products/trustage-insurance-program.

1, 2 LIMRA/Life Happens, “2020 Insurance Barometer Study” June 2, 2020