Generally speaking, many people lack a strong understanding of life insurance. Some of these individuals may be your clients.
Below are five things your clients may not know about life insurance and ways you can troubleshoot preconceived notions in your sales pitch. As you prepare for your next appointment, consider broaching the subject of life insurance with this information in mind.
It Costs Less Than A lot of People Think
Odds are you’ve probably heard this point plenty of times. Life Happens and LIMRA’s 2018 Insurance Barometer Study tells us that 63 percent of Americans won’t buy life insurance because they think it costs too much. It’s one of the primary things to keep in mind while you’re practicing your sales presentations.
Participants in the study were asked what they thought a healthy, non-smoking 30-year-old would pay annually for a $250,000 term life insurance policy. Well over half of the group overestimated the cost of the policy, with most consumers naming a price three times larger than the actual quote. Forty-four percent of millennials and 24 percent of everyone else thought the policy would cost more than $1,000 annually.
How can you fight the collective misbelief that the price of life insurance is just too high? Show them the numbers by handing them an illustration. You can also try giving them a comparison they can relate to.
According to the Bureau of Labor Statistics, the average household dishes out $3,008 a year to eat away from home. The life insurance policy in the example above? It would only cost that 30-year-old $160 annually in exchange for more financial security and peace of mind for years to come.
Online Policies Can Be More Expensive
These days, consumers will bargain hunt and purchase select products at lower prices online. What some don’t realize, however, is that life insurance policies aren’t always cheaper online.
Guaranteed issue or simplified issue products found online don’t require applicants to go through the full underwriting process. Since insurers take on more risk with these policies, they often charge higher premiums. Moreover, insurers may add specific terms and conditions in policies bought online that could limit the policyholder’s current or future benefits. Shoppers unfamiliar with insurance jargon could have a harder time finding and understanding these clauses, and it could cost them.
In Life Happens and LIMRA’s 2015 Insurance Barometer Study, only 27 percent of participants agreed that less underwriting could affect the price of life insurance. What’s more, over three-quarters of participants estimated that life insurance costs the same when bought online versus offline, and a mere seven percent estimated it costs more online.
During your sales appointments, inform your clients of the dangers of navigating the online market and the value of underwriting. In addition, let them know how your experience and expertise can help get them the policy that best suits their needs. You’re not only potentially saving them from a costly purchase, but you’re also giving them more reason to come back to you in the future if they’re not ready to buy that day.
Factors Other Than Their Medical History Affect Their Premiums
While most people know their medical history affects how much they pay for life insurance, it seems many are not aware of a number of other variables that insurers look at before offering them coverage at certain rates.
The 2015 Insurance Barometer Study found 78 percent of people agreed their health/medical history could affect the price of their life insurance. Fewer people agreed that their family health/medical history (64 percent), lifestyle/hobbies (49 percent), driving record (36 percent), and credit history (34 percent) could affect its price. (continue on Page 2)
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