How to Sell Life Insurance Policies:
The insurance industry is notoriously behind the times. But consumers have changed how they shop as well as how they think about life insurance. Savvy life insurance producers adjust their approach to increase sales and stay on top.
Editor’s note: This post was originally published on 7/7/16 and has been updated for accuracy and comprehension.
The way your prospects look at life insurance will greatly affect how you sell life insurance policies.
Times have changed and consumers view life insurance differently now than when you started in the industry.
It’s important to stay up-to-date on these ever-changing trends.
Leverage the knowledge you have about consumer behavior to increase your sales success stories.
Life insurance numbers don’t lie
According to LIMRA (the Life Insurance Marketing and Research Association), 6 in 10 people own life insurance.
And for those who don’t have it, many agree they need it.
Understanding these statistics about how and why people are purchasing life insurance can inform your choices as you approach prospective clients.
Here’s what you need to keep in mind.
1. Why people have life insurance coverage
As many as 132 million Americans rely on life insurance to protect their family security.
The major reasons given for owning life insurance include:
- Covering burial and other financial expenses (51%).
- Helping to replace lost income (34%).
- Helping to pay off the mortgage (26%).
2. Awareness of need
Many Americans understand that they need more coverage than they have.
- 30% of Americans know they need more life insurance. That boils down to more than 70 million people.
- 25% wish their spouse or partner would purchase some more life insurance. That number is around 40% for millennials.
3. Why people aren’t buying
The reason that people forego purchasing the coverage they need is primarily financial.
- 65% of Americans say they won’t buy because they believe it’s too expensive.
- About two-thirds say their mortgage, groceries and their electric bill are keeping them from buying more life insurance coverage.
- Nearly 50% say additional expenses like Internet, cable and cell phone service prevent them from getting covered.
A) People have inaccurate information about cost
On average, consumers estimate the cost of life insurance to be twice as high as the actual price.
Here are consumer estimates of a policy actually costing $160 per year:
- All consumers - $400 per year
- Consumers that own life insurance - $360 per year
- Consumers that do not own life insurance - $500 per year
B) Americans worry about their retirement - and the economy
The closer retirement gets, the more people begin to worry about what it will look like.
- Two-thirds of Americans worry about having enough money for retirement.
- 50 percent say the reason is that they’re concerned about the overall economy.
- 44% said they haven’t saved enough for retirement.
These very real concerns can make it difficult to see the important role of life insurance in retirement planning.
C) Consumers don’t understand why life insurance costs what it does
Most Americans understand that age and health can affect the cost of their coverage.
Your job is to educate and inform.
It’s important for your prospects to know all the factors used to determine how much they have to pay.
Here are some of the important factors to consider:
- Gender. Women tend to live longer so they typically pay less for a policy than a man with the exact same coverage.
- Physical condition. Body Mass Index (BMI) will be calculated along with the physical exam. If the number is outside of the normal range, the costs will be greater for life insurance coverage.
- Tobacco use. Because the chances of various diseases are higher for smokers and other tobacco users, the premiums are significantly higher for those who partake. Make sure your clients and prospects know that quitting can drastically improve their costs (and their health).
- Family medical history. This is taken into account due to the number of diseases that have a genetic base. The focus is parents, grandparents and siblings.
How to sell life insurance: Share the benefits
Life insurance research statistics give you an inside look at what your prospects are thinking and feeling.
This allows you to offer the solutions they need.
Here are some of the biggest selling points you can hit when you’re discussing life insurance with prospective clients.
1. People want to buy life insurance in person
- 71% of Americans say they research online, but more than half want to work with a financial professional to purchase life insurance.
- 1 in 4 consumers say they have bought or have tried to buy life insurance online, with younger consumers more likely to shop online than older people.
This gives you the opportunity to swoop in with your personal touch and show prospects that you’re there to guide them through the process and beyond.
2. Feeling the burn (or what happens without life insurance)
Ask your prospective clients what life would look life if the primary breadwinner in their home were to pass away.
Would they be able to maintain their current lifestyle?
It’s not a pleasant thought, but it can help drive home the fact that life insurance is necessary.
- 50% of the households in America would feel the financial impact of the loss of their primary wage earner in a year or less.
- over 40% would feel the impact within six months, including nearly 40% of households with an annual income of $100,000 or more.
Sell life insurance policies with cold, hard facts
Numbers are hard to dispute.
Sometimes, seeing a concrete number is all it takes to make someone comprehend their need for life insurance coverage.
When you’re familiar with how consumers see life insurance, you’ll better understand how to sell life insurance policies.
You’ll be able to counter sales objections and common misconceptions about the value of life insurance – and then help the consumer navigate the benefits of purchasing a life insurance policy.
Which of these statistics do you think will have the most impact on your prospective clients?