Published by Jimmy Stoffer on June 20th, 2019

In a given day, how many different “hats” do you wear? You wake up in the morning and you may be a spouse and a parent. You head to work and you’re a professional. You get a call from your sister on the way home and suddenly you’re a sibling. We all take on different roles and wear different hats depending on the situation.

In the insurance industry, when it comes to evaluating the right life insurance product for a group, it’s important to remember to try and put your “employee” hat on. It’s a difficult ask; we brokers and carriers obviously aren’t employees at the companies where we’re providing benefit solutions. But we have to remember to put ourselves in their shoes to provide the best solutions.

Wearing the employee “hat”

When looking at universal life options, keep in mind the financial situation of today’s employees. As we reviewed in a recent article, employees are living paycheck to paycheck and they aren’t doing much in the way of saving. What this means is that employees aren’t going to have a ton of wiggle room to buy an expensive policy and they may have the occasional hiccup when making payments - even on a less expensive policy.

When looking at the solutions we offer employees, if we’re not wearing our employee “hat” this is easy to overlook. Too often, I see partners of mine fall into the trap of wanting to offer a robust whole life policy. It makes sense in some ways, since it has guaranteed cash values and a guaranteed death benefit. For most employees, however, it’s too expensive and doesn’t offer the flexibility they need to get mileage out of their policy. A life insurance policy which no employee purchases, provides no protection at all.

Why Universal Life makes sense

Universal life policies make the most sense for today’s employees given their precarious financial situation. It accrues much-needed cash value which they can use to pay for their premiums in tough times. Remember, many of these employees are living paycheck to paycheck and, in fact, four in 10 aren’t prepared for a $400 dollar emergency.1 The likelihood that, at some point, they’ll need to dip into their cash value to maintain their policy is actually quite high. We see it all the time here at Trustmark.

On top of providing that flexibility, some policies can be used as a hybrid solution to cover the costs of long-term care as they age. Considering the costs and necessity for care as employee’s age, it’s a great fit and further plays into that need that employees have for flexibility.

Many brokers may point to a term life product as a solution for a more manageable costs. Term life doesn’t offer the cash value and added flexibility of a universal life policy. Which, when looking at it through the lens of many of the employees we’re serving, is an awfully big risk.

Far too many employees are stuck in a precarious situation. They need the protection of a life insurance policy, but with tight finances, it’s hard to find room in the budget for a policy. Universal life insurance provides the right balance of affordability and flexibility to make sure they have the protection they need. For those of us in the industry, it’s important we take this into account when choosing the right products for our groups and it all starts with putting on the right hat.

1 “Millions of Americans are just one paycheck away from ‘financial disaster’. Marketwatch. May 2019.