Financial Advisers Not Including Life Insurance in Planning

A survey of more than 2,410 adults —of which 786 currently have a financial adviser—shows that many advisers don’t discuss life insurance with their clients.

Results of the survey, conducted online by Harris Interactive on behalf of Saybrus Partners Inc. showed that about 49 percent of U.S. adults who have a financial adviser and a financial plan have spoken with their adviser about adding life insurance to their financial plan. Among those who have discussed life insurance with their advisers, 15 percent said the conversation took place more than 10 years ago, while 40 percent have discussed it within the past year. While this may indicate that discussions about life insurance are becoming more common, they do not necessarily include a review of existing policies for critical issues such as performance, affordability and potential policy lapse. According to the study, 47 percent of U.S. adults who have a financial adviser and have life insurance said their advisers have never reviewed their existing life insurance policy with them.

One-third of U.S. adults who have a financial adviser and a financial plan said that over the last two years, their adviser has recommended that they add some form of insurance to their financial plan. However, less than 24 percent were advised to include life insurance specifically. Only 10 percent said their adviser had recommended long-term care insurance.

“The survey affirmed statistically what we have heard anecdotally for years—financial advisers often do not discuss life insurance during the financial planning process,” said Kevin Kimbrough, national sales manager for Saybrus Partners, a subsidiary of The Phoenix Companies. “They are missing an opportunity to fill a critical gap in some existing financial plans while at the same time differentiating themselves and expanding their practices. Additionally, there are benefits to including assets such as life insurance that are not tied to the financial markets and therefore not subject to the same volatility we are currently seeing.”

According to the survey, more than four out of five U.S. adults who have a financial adviser and life insurance said they would be interested in life insurance policies that carried additional features not present in their current policy, with varying degrees of interest in specific features. For example, 30 percent said they would find a feature that would allow them to receive the life insurance payout as income if they were diagnosed with a terminal illness beneficial. Another 28 percent of indicated coverage for long-term care needs would be beneficial, and 18 percent thought a waiver of premium payments if they became disabled would be a beneficial addition to their policy.

“Clearly, consumers are interested in getting more from their life insurance policies,” Kimbrough said. “Given the well-known concerns about health care costs that dominated the national news last year, this relatively modest interest in health-related benefits is likely due to lack of knowledge of how they would work. This is another opportunity for financial advisers to help their clients maximize the benefits they can get from their life insurance.”