3 key points from Global Insurance Symposium
May 21, 2014 by Matthew Patane
1. Financial education is key
Larry Zimpleman, CEO, chairman and president of Principal Financial Group, said the U.S. needs to do a better job of teaching people financial literacy.
Speaking during a panel with fellow insurance executives, Zimpleman said the nation’s education system should teach students how to create a financial plan.
“The reality is we teach them a lot of things — English, math, science, whatever — but we never teach anybody financial literacy,” Zimpleman said. “We never teach anybody how to balance a checkbook, what a home mortgage is, how to use a credit card, etc.”
Without that literacy, he said, the U.S. will keep repeating history, such as the 2008 financial crisis.
2. More than Social Security is needed
Zimpleman and the other executives, including Allianz CEO Walter White, said consumers saving for retirement cannot solely rely on Social Security and other federal programs.
“There’s still a large segment of the population that is entirely dependent on Social Security in an era where if you ask people, particularly younger people, how confident are they in Social Security, you’ll get almost zero confidence,” White said.
With more of the baby boomer generation retiring, Zimpleman said those programs are too overtaxed to provide the only support for an individual during retirement.
“While I personally believe those systems will be sustained … I think at the same time to assume that Social Security can provide the bulk of your retirement income or that Medicare and Medicaid can pay the majority of your retirement health care expenses is a little bit naive,” Zimpleman said.
3. Take your time when choosing insurance
Iowa Insurance Commissioner Nick Gerhart said consumers looking to buy insurance or change their plans should not jump in too quickly.
Gerhart said consumers should ensure they are working with reputable, financially strong companies.
“Insurance is kind of an odd product, you buy it and hope you never use it, but when you need it, you need it, so make sure you’re working with a good company,” he said.
The same advice goes for the adviser a consumer works with.
“Work with a good agent,” Gerhart said. “I always tell folks find a good agent, find a good adviser and sleep on it, don’t buy a product that day, sleep on the recommendation that was made to you.”