Insurance: A Vital Form of Financial Security at Every Life Stage

By Sean Dilweg, Commissioner of Insurance

Insurance provides a vital form of financial security at every life stage. However, many consumers lack sufficient knowledge about insurance issues. Recently, the National Association of Insurance Commissioners (NAIC) - of which the Wisconsin Office of the Commissioner of Insurance (OCI) is a longstanding member - surveyed consumers in four distinct life stages about their views on a wide range of insurance matters. Some of the findings were quite alarming!

For example, 20 percent of young singles say they would let their auto insurance policies lapse to save money. Mind you, auto insurance is of crucial importance to drivers and their passengers - as well as everyone else on the road.

In addition, 18 percent of young singles said they would decline employer health insurance to save money. Scary, isn't it, that nearly a fifth of young people are so shortsighted about the immense impact that health costs could have on their lives.

As for young families, fewer than half have life insurance purchased on their own for either spouse. These are families with a child or children under the age of five who do not own any insurance. Even though some may have employer-provided insurance, that benefit often goes away when they change jobs or become unemployed.

More than half of established families - households with older children and greater assets to protect - did not understand the terms of health insurance continuation under COBRA, the federal law that enables individuals to continue their employer-provided health coverage if their employment ends.

Among empty nesters and seniors - despite the well documented increase in lifespan - only 12 percent think they are very likely to need long-term care. That percent is in stark contrast to publicly available data that indicate that about 60 percent of Americans who reach age 65 are likely to need long-term care.

Finally, among all groups there's a need for greater awareness about the issue of fake insurance. Fake insurance policies and phony health discount cards that defraud the public are sold by unlicensed companies. The facts are alarming: in the area of health insurance alone, the General Accounting Office of the federal government identified 144 fake insurers nationwide that sold bogus policies to more than 200,000 policyholders between the years 2000-2002, resulting in more than $252 million in unpaid claims.

Of concern is that in the survey, only 45 percent of consumers overall indicate that they get suspicious about the number one warning sign associated with fake insurance: a policy that costs significantly less (i.e., 15-20 percent less) than other policies with comparable coverage.

To address these consumer information needs - as well as many others - the Wisconsin Office of the Commissioner of Insurance, in conjunction with state insurance commissioners across the country and the NAIC, has embarked on a comprehensive, multi-media public education initiative.

Under the theme, Insure U - Get Smart About Insurance, we have created a virtual "university curriculum" of helpful information. The heart of Insure U is our online educational curriculum available at www.InsureUonline.org. It includes an introduction to the four basic types of insurance - auto, home, health and life - as well as helpful life stage considerations for each consumer segment.

There are several other educational elements within the Insure U public education campaign that will enable us to reach consumers throughout Wisconsin. We have produced TV and radio public service announcements that warn consumers to protect themselves from being scammed by fake insurance companies. These public service announcements advise consumers to stop before they write a check to an insurer, call our state insurance department and confirm that the company is legitimate and authorized to sell insurance in Wisconsin.

Finally, the OCI Web site offers numerous educational publications designed to help consumers makes sense of complicated insurance products.

Together, our Insure U public education elements - the online curriculum, public service announcements and consumer publications - will go a long way towards helping Americans Get Smart About Insurance and protect themselves from the perils of fraudulent insurance policies and fake insurance companies. However, the quickest way for anyone to get unbiased information and answers about insurance matters is to contact our department at 1-800-236-8517. We're here to protect the consumers of Wisconsin and to help them understand how insurance fits into their lives.