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Natural Partners: Credit Unions and Life Insurance Sometimes, all it Takes is a Nudge

Thursday, August 29, 2013   (0 Comments)
Posted by: Leah Redding
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In a survey by LIMRA, of the respondents who said they were likely to buy life insurance in the next 12 months, 35% said they hadn’t bought more life insurance yet because no one had approached them about it.

If your membership is anywhere close to the national average for life insurance coverage, you have many member households at serious financial risk. A life insurance industry research and advocacy organization, LIMRA, noted in its "Facts About Life 2013” report that 30% of Americans have no life insurance at all, and 44% don’t have individual life insurance. [Source: "Facts About Life 2013,”]

LIMRA Life insurance, quite simply, is considered a cornerstone of a family’s long-term financial security. Without it, all the assets your members have entrusted to your credit union—savings, retirement accounts, certificates of deposit, etc.—could be at risk of being liquidated too early, in some cases resulting in tax penalties. More to the point, your members’ quality of life could suffer unnecessarily at a time when they’re already suffering from the loss of a loved one.

If your credit union doesn’t currently work with a provider to promote life insurance to members, or if you have an under-performing program, consider including this matter in your strategic planning. And do it soon; unfortunately, it appears that Americans are taking on more risk than in past years.

Trend: Average Life Insurance Protection Is Dropping
According to the LIMRA report, the average amount of life insurance coverage for U.S. adults has declined $30,000 since 2004 to only $167,000.  

This amount wouldn’t last long for most families or even for a surviving spouse alone. It might be adequate if Social Security and other income sources exist to fill the gap. But how many of your members have taken the time to calculate the income they’d need if an income provider dies?

One reason so many households have inadequate life insurance is that the process of buying it can be intimidating, especially the first time. A credit union, as a trusted source of financial services, can help members take that important first step by connecting them with a licensed insurance representative in a no-risk, low-pressure environment.  

Use the Trust You’ve Earned
Sixty-one percent of Americans trust credit unions (compared with only 23% who trust the U.S. financial system as a whole) according to the 2012 Chicago Booth/Kellogg School Financial Trust Index. By choosing a life insurance provider wisely and promoting this service to members effectively, you’re removing the barrier of trust that stops members from exploring their life insurance needs.  

Raise members’ awareness of your life insurance program through multiple channels, including direct mail and educational material in your branches. Direct members to the provider’s website for more information. 

Offer access to a call center where members can get personal needs analysis from a licensed representative—this is a low-key, convenient option. And if it does lead to a purchase, you’ve helped your members protect the assets they have with you, while forming a long-term bond to your credit union.

CUNA Mutual Group’s MemberCONNECT® Program helps credit unions make TruStage life insurance products available to members. Across multiple channels, the MemberCONNECT Program ensures members get straightforward information about many types of insurance options. To learn more about the MemberCONNECT Program, call 1-800-356-2644.