Nearly half of American adults do not have life insurance. This is a little surprising, as the COVID-19 pandemic has raised consumer awareness about the benefits of life insurance. So why aren’t more people buying policies?
There are several common reasons people give for going without coverage; most can be traced back to misconceptions. In today’s marketplace, factors such as affordability and health-related qualifications are not nearly as much of an issue as they have been in the past.
That said, many consumers still aren’t fully aware of the options available to them. The first step in educating these consumers is to understand their apprehensions and misconceptions. The next step is to use that insight to address their objections and guide them toward a solution that meets their specific needs.
Below are the three most common life insurance objections agents and advisors hear from clients, along with some responses that could help overcome them:
“I can’t afford life insurance.”
Key findings from Life Happens and LIMRA’s 2021 Insurance Barometer Study show why this is among the most common objections to life insurance. According to that study, 44% of millennials overestimate the cost of life insurance by as much as five times the actual amount. In total, 81% of uninsured Americans cited cost as their reason for not owning a policy.
- “When was the last time you looked at insurance prices?”
- “Did you know that most people overestimate the cost of life insurance?”
- “We don’t really know what the price of insurance is because it’s based on underwriting. So let’s get you medically underwritten, and then we can talk about what the actual numbers will be.”
“I have other financial priorities right now.”
This reason was given by 75% of those polled in the study. While the COVID-19 pandemic did leave many struggling financially, more people have come to recognize the need for coverage over the last year. This can be a tough objection to overcome while the economy remains shaky. However, those who have regained footing are more likely to hear you out.
- “Did you know premiums increase with age? You’re never going to be any younger than you are today.”
- “Most people don’t get healthier as they age.”
“I don’t need life insurance.”
Even though this sounds like a hard “NO,” chances are it’s rooted in a lack of understanding about how life insurance works, and/or the benefits a policy could provide them and their family. Also consider the possibility that while one member of the household may feel that way, others might disagree. Studies have shown that roughly 35% of Americans say that if the primary wage earner died, the survivors would feel the financial impact within one month.
- “Why do you feel that way?”
- “How does the rest of your family feel about that?”
- “What about your final expenses?”
- “What plans have you made to make sure your family is taken care of after you’re gone?”
“I don’t qualify for coverage.”
Among those who took part in the latest Barometer Study, 43% believed they would not qualify for life insurance coverage. While health issues, certain lifestyles, and occupational hazards can disqualify people from certain policies, most people probably don’t realize they have options that don’t require medical underwriting.
- “You’re not the only one who has run into this problem. While you might not qualify for certain types of policies, there are other solutions. Would you like some information about guaranteed-issue life insurance?”
- “Just about anybody can qualify for a life insurance policy, regardless of health issues. There are many different types that account for many different situations.”
- “Many people may have misconceptions about the underwriting process. What is prompting you to say that?”
There are numerous reasons a person might give for turning away from life insurance coverage. Additional reasons from the Insurance Barometer Study:
- Not sure how much I need/what type to buy
- Do not trust insurance companies
- Do not trust insurance agents/financial advisors
Obviously, these objections stem from misconceptions. The solution is simple – education. IAMS has the resources you need to help educate your prospects. During Life Insurance Awareness Month, IAMS is offering a complimentary sales package to producers who want to increase LI sales.
Our 2021 LIAM Sales Kit includes:
- Consumer-Facing LI Concept Pieces
- LI & Business Solutions Concept Guides
- Checklists, Factfinders, and Prospecting Templates
- Factsheets and Studies
- LIAM Social Cards and Posts
- Life Insurance Email Drip Content and More!
Click below or call (800) 255-5055 to request your complimentary 2021 LIAM Sales Kit.