Many American families are uninsured or underinsured. Insurance agents can change that.
Your clients know they need to insure their homes and autos. But life insurance? That’s a much tougher sell. No one wants to think about the unthinkable, after all.The risk is always there, however, and the fact remains that many American families are underinsured or worse. While a 2016 study from LIMRA reported that the number of insured U.S. households has risen by five million since 2010, it found that 30% of U.S. households still don’t have life insurance, a whopping total of 37 million. It also noted that the overall increase is a result of population growth, not an increase in market penetration.
Even those with policies have greatly underestimated the level of coverage they need. In the same study, LIMRA found that 48% of U.S. households face a life insurance gap of $200,000, leaving a staggering 60 million American families with insufficient coverage. The lone bright spot is that 70% of millennials hold either an individual or group policy, a rise of ten percentage points since 2010.
To raise those numbers, insurance agents need ways to convince their prospects and clients — even the younger ones — that they need life insurance. If you’re having trouble convincing clients to buy the coverage their families need, take our advice and make your pitch as appealing as possible.
It’s Not as Expensive as They Believe
Many of your clients believe life insurance just doesn’t fit their budget. Earlier this year, LIMRA’s “2017 Insurance Barometer Study” asked more than 2,000 adults how much a $250,000 term life insurance policy would cost a healthy 30-year-old. The median reply was $500, three times the actual cost. With that in mind, remind your clients first that life insurance is an affordable investment for nearly everyone. Since premiums are even lower for younger policyholders, it’ll be especially enticing to millennial clients.You should also stress that a premium’s cost depends on the policy’s length. According to NerdWallet, for example, a 30-year term life policy for a 30-year-old male costs $240, while a whole life policy costs $2,385. If a client has concerns about the cost, tell them that a shorter policy can give them the coverage they need at a more reasonable price.
They Can Choose the Policy Type
Since term and whole life insurance both offer a guaranteed payout and constant premiums, your clients can choose whichever type best meets their financial and personal needs. Still, there are some important differences that you should spell out for your clients.
Whole life insurance allows policyholders to access money while living by accumulating cash value in the contract. By contrast, a term life policy offers coverage throughout the holder’s earning years without this cash value component. Some clients might prefer the opportunity to access money while living; some might prefer to leave everything to their families. Let them know that it’s their choice.
Explain the Benefits in Terms (and Emotions) They Understand
Life insurance can be a sensitive subject. Acknowledge the emotions involved; let your clients know that you’re acting with them, not for them. Treat it like a family decision, not business as usual. Any policy needs to make emotional sense for your client.
Other clients might find that life insurance doesn’t make financial sense for them, unaware that it covers much more than lost income. Tell them that life insurance can fund their children’s education, their spouse’s retirement, or paying off debts and mortgages. Stress the possible consequences of not preparing for those costs. Share stories about how other clients provided for their families after death by buying robust policies.At every step of the process, detail the policy’s terms in language that clients can easily grasp. According to LIMRA, 83% of consumers ranked “easy to understand” as the top factor they considered when buying life insurance. Make comprehension a priority throughout your conversations.
Life insurance is a complex and touchy product to sell. Again, no one wants to think that the unthinkable might happen. It’s your job to help your clients face and prepare for it.