96% of Americans Overestimate Their Insurance Knowledge—What You Should Do About It

By Allison Babberl on May 23, 2017 in Selling

96% of Americans Overestimate Their Insurance Knowledge—What You Should Do About It

We are not the health experts we thought we were

Recent studies have proven what many of you probably already assumed—Americans think they know way more than they actually do when it comes to health insurance.

One survey conducted by PolicyGenius found that 96% of Americans overestimate their understanding of these health insurance concepts: deductible, copay, coinsurance, and out-of-pocket maximum. Their findings showed the following:

  • 65% of Millennials (aged 25-34) said they definitely knew the terms, but only 36% answered the questionnaire correctly.
  • 71% of Baby Boomers (aged 55-64) said they definitely knew the terms, but only 47% answered correctly.
  • 72% of men said they definitely knew the terms, but only 44% answered correctly.
  • 64% of women said they definitely knew the terms, but only 41% answered correctly.

A similar study conducted by George Loewenstein, a healthcare economist, found that only 14% of its respondents could identify the four terms and found the following results:

  • 97% believed they knew what a deductible was, but only 78% were able to correctly identify it in the questionnaire.
  • 100% believed they knew what a copay was, but only 72% were able to correctly identify it.
  • 57% believed they knew what coinsurance was, but only 34% were able to correctly identify it.
  • 93% believed they knew what maximum out-of-pocket was, but only 55% were able to correctly identify.

Why does this matter?

The more your clients and prospects believe that health insurance is confusing, the more work it’ll create for you as their agent. PolicyGenius found that only 39% of their respondents were very confident in their ability to choose the right plan for their needs, while 12% said they were not at all confident in their ability. On top of that, UnitedHealthcare’s “Consumer Sentiment Survey” found that 25% of their respondents would rather file their annual income taxes than select a health plan.

Plus, with Open Enrollment being shortened to only 45 days this year, the stress and anxiety of having to quickly choose a plan may lead your clients to choose plans not suited for their needs. Making an uninformed decision about coverage could mean one hard financial year for your client and one where they aren’t receiving the coverage they need. On top of that, making a bad decision could reflect poorly on you because they may blame you for the lack of education and spread bad publicity about you, lower your retention, and just make your job that much more stressful.

What can you do?

Educate. One of the best ways to improve this situation is by educating your current clients, prospects, and leads about these terms. Consider adding to your website and/or making a printout with these four terms (and more) that you can easily hand out to your clients, prospects, and leads to ensure they have a better chance of understanding them. Here is a fantastic glossary that you could use detailing all the important health insurance terms in easy-to-read laymen’s language.

Helping your clients make educated and informed choices will result in happier clients that aren’t second guessing their coverage or blaming you for anything they lack. And since you’re taking all this time to properly educate them and help them in their journey, they’ll feel more inclined to stay with you and refer you to others.

Remember, for many (even those that believe they understand it all!), insurance is confusing; so, when selling, keep this awesome quote from Kevin Trokey, founding partner at Q4intelligence, in mind:

Kevin Trokey's "Selling is a Transfer of Confidence" Tweet

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Allison Babberl
Allison Babberl

Allison is the Marketing Content Specialist at AgencyBloc. She creates educational content and designs videos to promote AgencyBloc's resources to help you organize, automate, and grow your insurance agency. Favorite quote: “Conversation is the bedrock of relationships. Without it, our relationships are devoid of substance.” -Maribeth Kuzmeski More articles

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