One thing I had to learn early in my career as a life insurance broker was that not everybody I spoke to was going to purchase a policy from me. The list of reasons people don’t get a policy is a long one, so I have narrowed it down into the top 10 (not necessarily in order of popularity):
- They think they don’t need it. This is a big one, even after eliminating those in #2. I recently spoke to a father of 5 young children who rejected my offer because he “just didn’t see a need for life insurance.” I asked him how his wife would be able to support his 5 kids if he passed away and they no longer could depend on his income. The bottom line is anybody who has a spouse (or significant other) and/or children that depend on his/her income should have life insurance. There are other personal and business reasons for buying life insurance, but this one seems to be the biggest reason.
- They really don’t need it. People who don’t have families dependent on their incomes usually don’t have a need for life insurance (unless they want to take advantage of the living benefits of a permanent policy, such as whole life or universal life insurance). If there are no other needs, such as business continuation, estate protection or paying for final expenses, then they shouldn’t purchase a policy. Any life insurance agent or broker worth his/her salt will not sell a policy to someone who doesn’t have a clear need for it.
- They think they can’t afford it. Either they overestimate the cost of a policy or don’t consider that, with a minor shift in one’s budget, affording a policy is not an issue. In the overestimating category, the 2014 Insurance Barometer Study done by LIMRA and LifeHappens.org, (see yesterday’s post) says it all – While 2 of 3 consumers say life insurance is too expensive to purchase, people tend to overestimate the cost. In fact, a quarter of the respondents thought the price for a $250,000 term policy (that would cost $15o per year) would cost at least $1,000 annually. In the budget-shifting category, let’s double the premium of the policy mentioned in the last paragraph to $300 annually, which would purchase a $650,000 20 year term policy for a healthy, 30 year old male. If this gentlemen has a family and tells me he can’t afford a policy, my first question is, “how much do you spend at Starbucks (or other coffee emporium) every morning?” If the answer is $3 or higher, I show them that if they cut back on the daily java drinks, they can easily afford that policy. If they don’t indulge in a daily caffeine treat, I can usually find other places to find $25 dollars a month to financially protect their families.
- They really can’t afford it. Yes, sadly it’s true – there are people who can’t afford to purchase even the smallest policy (no matter how hard I try to find it in the budget). I have seen these numbers grow since the Great Recession began. Hopefully, these numbers will see a reversal in the near future.
- They procrastinate. Okay, I know that some people would rather do anything than confront the subject of one’s mortality but, if you fall into the Need it category, you just need to bite the bullet and get it done. Because it’s so easy to procrastinate doing something so lacking in excitement and sex appeal, a big part of my job is nudging my prospective clients and applicants along in the process until they have a policy in hand.
- They forgot to pay the premium and let the policy lapse. This one baffles me. Why would you go through the application and medical exam process and lose the policy (and all the money you spent on it to date) just because you forgot to pay the premium? Setting up a checking account debit with the insurance company is a foolproof way to ensure your premiums are paid.
- They’d rather have root canal then speak to a life insurance agent. I’ve been to one too many insurance company conventions and meetings and I can’t say I disagree with with this one. However, all kidding aside, I’ve met some really great people in the business as well, and most I’ve met care a lot about doing the right thing for their clients. In most cases, life insurance agents/brokers like to help people (albeit sometimes too aggressively, I confess). You can shop for your agent/broker to find one you’re compatible with. Start with one of the many online independent agents.
- They want to buy it but they are extremely confused about the subject. There is a lot of information out there about the subject and a lot of opinions (e.g. the right type of policy to buy, how much coverage is needed, etc.), so it’s easy to get overwhelmed with information. This is a great example of too much analysis leading to paralysis. As a result, many folks start out to purchase a policy and wind up throwing their hands up and quitting the search. My suggestion is to find an advisor you trust and seek his/her advice.
- They applied but didn’t take the policy because they didn’t agree with the health class assigned by the insurance company. I wish I could say I made this one up, but a lot of people get really upset when the insurance company puts them in a lower health class than they think they deserve. Unfortunately, it begins with unrealistic expectations created by a quote they received. Not everyone is in the best health class, and it’s extremely important to get the most accurate quotes up front so you don’t get disappointed when the policy is issued.
- They just aren’t interested in securing the financial future of their families. Thankfully, I don’t hear this one a lot, but I have to include it on the list because I do run into people with this viewpoint from time to time. One charming “gentleman” said to me, “I’ll be dead, so I won’t have to worry about it, will I?” That’s one objection I won’t even try to overcome because, frankly, I don’t want to spend more time than I have to with someone like that, let alone try to sell him a policy.
About Richard Reich
In my 20+ years as an independent life and disability insurance broker, I have personally assisted thousands of clients with their life and disability insurance needs. As a national broker, I am licensed to write life and disability insurance in all 50 states and the District of Columbia.