Insurance Commissioners Aim to Alleviate Insurance Misperceptions

Single parents, domestic partners, grandparents raising children and members of the military have several misperceptions about the insurance products available to them, according to a recent survey by the National Association of Insurance Commissioners (NAIC). Based on its survey results, the association expanded its Insure U consumer education program.

Following is a summary of the key research findings, with interpretive commentary provided by the NAIC:

Domestic Partners
-49 percent of domestic partners said they have no formal documentation providing evidence of their relationship. For insurance purposes, such documentation is important in situations where policies specifically provide benefits to members of a family or household, NAIC said.

-Only 47 percent of domestic partners said they had plans that allowed coverage of their partner. That means more than half the people in these committed relationships had to obtain coverage from another source, possibly paying more money than if they were treated in the same way as a married couple, the association indicated.

Single Parents
-15 percent of single parents said their children did not have health insurance. These parents may not be aware of state and federal programs that provide health insurance for children – information that is available through state insurance departments.

-Only 37 percent of single parents said they carried life insurance for
the benefit of their child. Of those, 70 percent listed the child directly as the beneficiary. Because laws generally preclude underage children from receiving an insurance payout, this financial benefit could be tied up in probate, rather than directly becoming available to help a surviving child.

Grandparents Raising Grandchildren
-52 percent of grandparents raising grandchildren said they had no proof — such as legal guardianship papers — to document their role in raising their grandchildren.Such documentation is useful, if not essential, when dealing with public schools, seeking access to government programs and addressing insurance issues.

-57 percent of grandparents who were raising a teenager of driving age
said they did not have their grandchild listed as a secondary driver
on their auto insurance policy. Similarly, 35 percent said their homeowners policy did not provide coverage of their grandchild’s possessions. Specifically adding the grandchild to these policies will ensure that their belongings and their actions are covered by the grandparents’ insurance.

Members of Military
-38 percent of members of the military did not know whether or not
their policies covered death due to an act of war. Many standard life insurance policies, in fact, exclude acts of war. Members of the military who are subject to combat conditions should verify whether their insurance policy provides benefits for a war zone or an act of war.

-32 percent of members of the military were unaware whether their homeowners policy limited coverage of unoccupied homes. Many homeowners policies do not cover unoccupied homes — a provision that could directly affect military personnel deployed away from home for long periods of time.

Because of those results, new topic areas in Insure U are aimed at consumers in four life situations: domestic partners, single parents, grandparents raising grandchildren and members of the military.

“Expanding our Insure U program directly reflects the varied life situations and needs that characterize our diverse nation,” said NAIC President and Kansas Insurance Commissioner Sandy Praeger. “Insure U is an important resource to help consumers better understand insurance issues specific to their experiences. I’m proud that we have four new ways for Americans to get smart about insurance.”

The Insure U curriculum, available at www.insureUonline.org, provides insurance tips and special considerations on four basic types of insurance: auto, home, health and life. The expanded topics build on the four life situations already available on the site: young singles, young families, established families and seniors.

The Insure U curriculum also provides information about how to avoid being scammed by fake insurance companies selling fraudulent insurance policies. Disaster preparedness and long-term care insurance tips are also included. After reviewing the curriculum, consumers can take an online quiz and download an Insure U diploma.

The NAIC conducted national research in March 2008 among domestic partners, single parents, grandparents raising grandchildren and members of the military to assist in developing the Insure U content.

“In order to help us develop relevant tips and information, we first needed to find out where the information gaps occur,” said NAIC Executive Vice President and CEO Catherine J. Weatherford. “Our research identified many misperceptions and misunderstandings about insurance among these consumer groups.”

Source: NAIC