Insurance agents often get lost in too much
industry jargon.
When it comes to
communication, agents generally have winning personalities and connect easily
with clients.
It's the words they
are using that could stand to change.
In life insurance
contracts, phrases like “cash surrender value,” “convertible term insurance,”
“premium loan,” “non-participating,” and “yearly renewable term,” entail a
heavy slog for most people. Better to leave them out of the discussion, some
people say.
Annuity contracts
can do without mention of “riders,” “surrender charges,” “death benefits,”
“contract values” and even “principal,” according to Jean Statler, executive
director for the Alliance for Lifetime income.
Best to substitute
those with terms like “add-on option” or “add-on benefit,” “early withdrawal
charge,” “family protection option,” “account value” or “initial investment
amount,” she said. At least that’s what her group’s recent market research has
found.
“Nobody wants to
talk about a 'death benefit,'” Statler said. But mention a “family protection
plan” and now you’re talking.
Jargon has always
been a part of the industry, but some industry watchers can’t help but point
out the irony between stagnant industry growth rates and abstruse language that
doesn’t do much to draw in a new insurance buyer.
An insurance primer
published several years ago by Great-West Life contained 13 pages of text,
three pages of which a glossary was devoted to explaining terms like “cash
surrender value,” “convertible term insurance,” “premium loan,”
“non-participating,” and “yearly renewable term.”
Complex
Contracts
To be fair,
regulators and lawyers have had a role to play and deserve some of the blame
for shaping industry phrases, but even they are open to working to turn
insurance language into something more meaningful and approachable.
It’s important to
remember that advisors need to play the role of educator and stop assuming that
everybody understands insurance language as well as they do, said Dave Wood,
the Martin Chair of Insurance at Middle Tennessee State University.
Insurance contracts
aren’t the same as going to the supermarket to buy milk where prices pretty
much the same and everybody is basically buying the same thing. “Wording in the
contract is very important,” he said.
Mass torts claims
have gotten advisors in trouble in the past when life insurance products were
sold as retirement products, which they are not, he said.
“There’s a balance
to be struck,” by advisors between explaining a contract in understandable
terms without losing the client’s attention, he said.
You never want
clients to shy away from asking questions, but if you come off spouting a lot
of technical jargon people’s eyes glaze over and they tend to steer away from
engaging with the advisor, said Sallie Mullins Thompson, an advisor in New York
City.
Thompson has
developed a keen sense of when she’s starting to lose her audience.
“Only speaking in
plain English will create that atmosphere and they then trust you,” Thompson
said. “If you talk about something too complex they get suspicious and ask 'Are
they really on my side?'”
Phrases like “tax
exempt” and “tax deferred,” phrases that advisors take for granted, often
confuse people not attuned to the nuances and use the phrases interchangeably,
she said.
Even terms as basic
as “conservative” and “growth” mean different things to people, she said
Many people
understand “growth” to mean a steady increase in their portfolio, but advisors
know that values can shrink and that talking about growth is meaningless
without also talking about the time a client stay invested.
Explaining that to
people often uncovers that clients may not be that growth-oriented after all,
she said.
“There are really a
lot of different gotchas in the investment arenas,” Thompson said.
Insurers’
Initiatives
Insurers play a
role in urging advisors toward the vernacular.
Instead of using
terms like “premium,” better to use “cost,” or “price,” said Mark Teitelbaum,
vice president of Advanced Markets with Axa Equitable, which distributes life
and annuities through thousands of agents around the country.
Consistency of
language – plain English – across advisor and consumer sales channels is
critical so that consumers don’t have to decode what advisors mean.
Instead of a loan
or a withdrawal, better for advisors to tell clients about how they have access
to their money. When clients hear about “overfunding a policy,” they
immediately think they’ve paid too much instead of securing a higher dividend.
“Dividend” –
there’s another word advisors can delete and instead use the word “benefit.”
“It does make a
difference. You want to be heard,” said Jessica Baehr, chief operating officer
of Life & Employee Benefits at Axa Equitable. “For Axa, this is our focus,
and this is our approach – to speak in plain English and in the language of our
client.”
Insurance terms
need to be easily understandable outside of the life insurance industry, Baehr
said.
“You have to speak
a human if you want humans to understand,” said Emily Wilcox, head of account
management at the ag agency Johannes Leonardo, MassMutual’s create and
strategic lead agency which helped create the “Live Mutual” campaign.
The trend is
particularly pronounced in the financial services arena as brands strive to
become more transparent and relatable and move away from complexity, jargon and
opacity, she said.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the
financial services industry for more than 15 years. Cyril may be reached
at cyril.tuohy@innfeedback.com.
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