I recently ran across a blog article from a major news outlet that talked about the personal impact of a particular notice that the author had received from an insurance company regarding the disparity in the national tax treatment of same-sex couples and how it applied to their situation within the state of Illinois. One of the key phrases in the letter to policy holders said, “Pursuant to Section 3 of the Federal Defense of Marriage Act (“DOMA”), same-sex couples and civil unions are not recognized for the purposes of federal law. Therefore, the favorable income-deferral options afforded by federal tax law to an opposite-sex spouse under Internal Revenue Code sections 72(s) and 401(a)(9) and “spousal continuation” rights are currently not available to a party in a civil union.”
The blog went on to point out that this type of document blatantly shows what discrimination looks like, and how the mishmash of laws between the states and the federal government make things needlessly complicated for real people. It’s not just an abstract notion anymore when it affects you directly. Because of the data we track, we see these kinds of notices all the time. This dry legalese tone isn’t unique to this situation, and is actually quite common for all sorts of communication from every carrier. As someone who’s been in the industry a long time, I recognize this sort thing as standard boilerplate disclosure language and thus don’t take its dry tone personally, but unfortunately, for someone who is simply a policy holder and unused to dealing with this type of heavy detailed language, it can seem quite clinical and intimidating.
It got me to wondering why insurers so often communicate like this. Is it to step back and only inform without putting any kind of a slant on it? Perhaps so, but mostly I think it’s intended to be posterior-covering information intended to absolve the insurer from responsibility for the situation being what it is; almost as if to cry out to the consumer that regardless of the issue, “it’s not our fault!”
The questions I’m putting forth are these; why do insurers seem to only communicate through the dense wording of legalese? Political stance for this particular issue aside, why not soften the language, combine the notice with some sort of contextual piece, and perhaps a Q&A document? For sure cost is a factor for direct mail, but with so many consumers opting for “green” email communications, that’s fast becoming a non-issue. I’d propose that either they are either lazy, don’t care, or simply lack some sort of incentive to do things differently. Which do you think it is? Regardless of the reasons, in this season of making new-years resolutions, perhaps this is a good time for insurers to try to communicate at a more personal level and quit alienating their policyholders.
On a recent trip, I flew on an airline that I hadn’t used in a very long time. It had the cheapest fare, and since I wasn’t going to be flying first class, I figured it didn’t matter. In my mind, coach is coach, and it’s pretty much a commodity at this point. I truly didn’t worry about which carrier it was. Hindsight being 20/20, I wish I could go back in time and change my decision. On the other hand, I got to see a real life example of why the timing and concept of a marketing message is important, and how doing it wrong can potentially have a negative effect. My intent here isn’t to bash my flight experience, but it provides the context for the sales offer I heard.
I’m a tall guy, not freakishly so, but tall enough that I am extremely uncomfortable in places like movie theaters, the back seats of cars, and of course coach airline seats. The seats are measured to accommodate waists, not shoulders, so they are inadequate for anyone older than middle school kids if you don’t want to touch the person next to you or get hit by every single person walking down the aisle of the plane if you have the aisle seat, which I did. So after nearly three hours of getting hit, rubbing shoulders with the guy next to me, and getting irritated by the frequency of annoying interruptions/announcements over the intercom trying to sell me a variety of lunches and beverages, I was treated to a nearly four minute announcement that could not have made me feel worse about my flight. I spent the last few minutes of time, when using electronic devices was still allowed, to hear an offer for their frequent flier mileage credit card – complete with the promise of a large number of miles added to the account if I filled out the application today.
I think the best time to try and approach someone for a loyalty program is when they’ve had a positive experience, or at least a potentially positive experience, not after three hours of near misery. Perhaps I’m being melodramatic, but the anecdotal evidence I have points to the fact that most people don’t usually have a great flying experience. Since everything about the flight both physically, and from an aesthetic point of view (the plane was dirty and they were too cheap to have any video monitors) wasn’t great, I was left wondering, “Why would I inflect more of this on myself?”
This brings me of course to the inevitable insurance tie-in. While this airline was cheerfully trying to sell me more misery, it occurred to me that insurance as a product tries to alleviate misery and suffering by providing the resources to make you whole after what is usually a horrible experience. What I found interesting here was that insurance companies in general and this particular airline had opposite strategies. Insurance companies try to sell you in advance of a horrible experience, largely needing you to imagine or remember a bad event, in order to sell you products that help heal and restore you to where you were before the event. While at the same time, this airline was trying to sell me on the opportunity for more experiences like the one I just had without taking into account that it might be a bad experience and would reinforce that experience rather than alleviate it.
Can you change outcomes and build on sales opportunities if you change your timing? It would be worth a shot to find out. I wonder what would happen if insurance companies used the context of a bad experience, like an auto accident, to update and cross sell products like supplemental health and life insurance – that hasn’t happened to people I know that have been in accidents. And conversely, if the airline had tried to sell me a loyalty program at the start of the flight after getting settled in and might be in a better mood and more receptive to a well-tailored sales pitch. Perhaps opportunities lie in the “when”, and not always the “What” or “Why.”
As families gather around this year, a variety of conversations are sure to take place; sports, politics, food, and general family news, some of which might even generate some heated arguments. One thing though that’s probably not going to come up, since quite frankly it’s a bit on the depressing side, is a conversation about having all your affairs in order. Conversations about where family members can find important documents; wills, living wills, powers of attorney, financial accounts, and yes, even life insurance contracts. It’s a conversation you should have, even if it’s not fun.
Due to lost, hidden, or misplaced paperwork, it’s quite possible to have a policy that’s not entirely obvious, so communication is important. Don’t assume that it can be easily discovered. With so many bills and statements being sent online, policies can get buried and all but forgotten. As a result, many life insurance policies go unclaimed and the proceeds turned over to the state. Much of the problem stems from the simple fact that family members don’t know if the deceased had life insurance, and if so, which company. It’s commonly assumed that life insurers will somehow know and that the payment of the policy will occur automatically, but that’s definitely not the case. Many insurers do use resources like the Social Security death database to determine if death benefits should in fact be paid out, but proactive usage of it to find potential beneficiaries has been, if not rare, than much less common than it should be. The onus is really on families to know which life insurers to contact, and it’s a simple problem that’s easily resolved through some basic communication.
As morbid as this might sound, I think we’d all our families to talk about us at future family gatherings in a positive light. It’s better to be remembered for how we took care of each other, not that we left everyone hanging to pay our bills and debts, and put shackles on our family’s financial future. The holidays can be a tough time of the year for families following the loss of a loved-one. I think most of us would like to be remembered for what we did, and how we lived, than for what we forgot to do. So while we are all gathered together as families this time of year, or quite frankly any time of year, please take some time to show or tell the family what policies you have and with whom. And if you don’t have life insurance, be sure to communicate those excuses as well, perhaps you can convince your family that they will be better off financially after you’re gone if you don’t have life insurance. That would make a fascinating argument; I’m open to hearing what that would sound like. Or better yet, just go out and make sure you’re covered.
At various points in my life I’ve played some of the massive multi-player online role-playing games (MMORPG) that are out there. They typically involve dedication and lots of time building up the characters and learning the rules and story for the universe you’re playing in. Between my own experience and reading the various fan sites and blogs, I’ve found that MMORPG’s bring out a lot of personal investment in how the game is played, rather than being entirely goal-oriented or simply concerned with getting to the next playing level. You don’t beat the game, you participate in it.
In many of the games I play, you can do certain things that cause an untimely demise for your character, despite your best efforts; sometimes the character “dies” and has to be re-spawned. In most games that involves losing either your place in the game, or items and built-up experience. It’s meant to be a penalty, but not one so tough as to make the game impossible to play. If you’ve got a lot of equipment or wealth to lose by dying, then it becomes a good motivator for doing what you need to do to survive.
Like most who play the big online games, I’ve gotten rather attached to the character I’ve created and built up, and I’ve got some real concern what happens to it, almost to the point of, dare I say it, risk aversion. When the character dies in situations where you can end up losing a lot, it can be somewhat distressing. After a particularly grueling quest in one of my games, I kept thinking to myself, “I wonder what would happen if there was some better form of “life-insurance” for the character? What if I had some way to make sure I can keep more of my stuff rather than losing it or having to start over – especially when my character gets caught up in something I didn’t intend and hadn’t planned for?” Oh wait a minute. That sounds a bit like real life doesn’t it? You go about your business doing whatever it is you do – living life, and sometimes bad things happen. Sometimes you get lots of notice, or sometimes events happen quite suddenly, but either way if you’re not prepared, it will make a bad situation even worse.
Now, in the investment and insurance world, (where I spend most of my time) we talk about risk aversion a lot. It helps determine which insurance products and investment strategies are most appropriate for clients. I wonder how many people, particularly younger folks that grew up playing a variety of video games, fail to take a few of those gaming lessons to heart in the real world. How many MMORPG players take more care to prepare for the risk of the eventual untimely (temporary) demise of their character, than for their own real-life world? MMORPG players or not, most people don’t see the world as a place to think about unexpected risk, and then actually take the actions needed to prepare for it.
Selling insurance often means having to relate risks to the client in new ways. Given the number of people out there that play video games – it’s not just kids- this could be a way to illustrate in a more tangible way how to plan for the worst. Buying life insurance isn’t so much an expense; it’s really leveling-up.