Letting the Light In: The Value of Transparency for Life Insurance Policy Owners
It’s not entirely realistic to expect that consumers have a thorough understanding of every decision they make; for instance, a heart surgeon doesn’t need to explain every technical aspect of a procedure before a patient agrees to it. But when it comes to life insurance, transparency is a reasonable expectation.
With a host of different types of insurance covering varying payment options and coverage periods, life insurance has become increasingly confusing over the last few decades. But a recent study shows that most individuals who buy and sell life insurance believe it is their right to understand the product, its benefits and its limitations.
The 2017 Insurance Barometer Study, conducted annually by LIMRA and Life Happens, polled insurance consumers on the improvements they believed should be made to the life insurance process. Of those surveyed, 83 percent said that the most crucial factor in choosing life insurance was having a product that was “easy to understand.” The study also found that 70 percent of insurance customers would like insurance to be offered without a physical exam, and 67 percent are looking for more transparency regarding risk and price when they shop for life insurance.
Just as consumers are owed a transparent process when they are purchasing life insurance, they should also have all of the facts when an insurance policy is no longer serving their needs. A life settlement is often a favorable option for seniors looking for extra resources in exchange for a burdensome insurance policy. As the life settlement market grows, so does transparency around consumer options when it comes to surrendering their life insurance policy. Recent legislative efforts, such as the life settlement regulation statutes that have been passed in 43 states, seek to make sure consumers have all of the facts about the life settlement option when considering giving up their life insurance policy. Consumer disclosure is a key component of many of those life settlement laws.
Life insurance, both at the beginning and the end of the policy’s life cycle, can serve both Americans and their beneficiaries, but consumers are not well-served when providers seek to obfuscate or inadequately inform them about the risks, benefits and parameters of an insurance policy. Similarly, consumers should have access to full information about their options regarding the sale of a policy. Try Magna’s simple life settlement calculator to understand how much value your policy could have and learn more about selling your policy by exploring our FAQs.