What Insurance Agents Need To Know About the State of Life Insurance Ownership

Learn more about the life insurance industry landscape so that you can sell more than before.

As a life insurance agent, you know that both term and whole (permanent) life insurance policies are designed to help your clients have financial peace of mind after the death of a loved one.

As of January 2021, only 52% of Americans own life insurance–despite agents’ efforts to show them the value. 

Let’s examine common reasons why people are and aren’t buying policies so that you can better navigate conversations around this product–and in turn, sell more life insurance.

Why People Are and Aren’t Buying Life Insurance

Financial peace of mind for their loved ones is the main reason people buy life insurance. They want to know that, in the event of their death, their loved ones don’t have to worry about paying for their funeral costs, debts, or other expenses.

But, with only a little over half of Americans owning life insurance, we can see a large percentage of people don’t buy it–why?

Global research, consulting, and professional development non-profit trade association, LIMRA, put together a fact sheet that dives into this. Here’s a snippet of what they found:

LIMRA’s 2021 Life Insurance Awareness Month Fact Sheet

Why People Are Not Buying Life Insurance

As you can see above, people have their hesitations about life insurance. Most say it’s too expensive, others have different financial priorities, and some are unsure what type of and how much coverage they should get.

LIMRA also studied the top misconceptions about life insurance, and along with the hesitations above, they found that: 

• People think the coverage they have through work is sufficient (29%)
• Many have procrastinated buying life insurance because they think it’s too difficult and are intimidated by the process (46%)
• Many people believe they don’t need coverage until they’re older–however, nearly 40% of Americans wish they’d purchased life insurance earlier

People also agree that a quicker, and easier underwriting process that doesn’t require a medical exam and explains pricing and risk classifications simply would make life insurance more appealing.

Why People Are Buying Life Insurance 

As you can see from the chart above, the main reasons people buy life insurance are to cover burial costs, replace income, or to transfer wealth. 

In addition to these, there are certain life events that may entice people to start shopping for life insurance:

• Getting married
• Starting a family
• A death in the family 
• Career changes that either provide more or better coverage options or pay enough to enable them to afford a policy

Overcome the Barriers to Selling Life Insurance 

Since people have a hard time understanding the need for life insurance and may have financial restrictions standing in the way, education is key.

Before you dive into educating your audience, you want to get an idea of their buying journey. Deloitte conducted in-depth research on the life insurance buyer journey; the image below is a great visual representation:

Your prospects’ awareness of life insurance may–and probably will–come from a carrier’s marketing and advertising efforts. Then, they will do their own online research during what marketers call the “Consideration” stage to find carriers and local agencies to work with, which helps them reach the Purchasing Decision stage.

Your agency can have a voice in all stages of your prospect’s (or client’s!) buyer journey.

The pre-purchase stage is when your customer service experience is critical to winning more business–and retaining current customers when it’s time for renewal.

In the “Awareness” stage, promote your educational resources via email and social media. Not sure what educational resources you should be providing? Identify the questions prospects are asking!

Those looking into life insurance and considering buying coverage are asking Google things like:

• What is life insurance?
• What is term life insurance?
• How much life insurance do I need?
• How does life insurance work?

Center your educational resources around those topics, as it can help prospects build trust with you and overcome those barriers to conversion. Be ready with these resources and your expert advice to help them purchase based on their unique life situations.

By taking thorough notes during your prospect/client meetings and using tools like Wordtracker or Google Keyword Planner (pictured above), you’re able to proactively prepare answers to frequently asked questions about life insurance.

Life insurance needs assessment tools can help tremendously during your meetings in the Purchasing Decision stage. See our blog, Life Insurance Needs Assessment Resources for Insurance Agents, for a list of some great free resources.

Finally, Postpurchase Interactions are important for client retention. Make sure you have an effective client onboarding process in place with our [Free] 6 Steps to Onboarding a New Client PDF.

The Bottom Line: Education throughout the buyer journey is the key to growing and retaining your book of business.

Throughout the year, use AgencyBloc’s Automated Workflow to ensure you maintain regular communication with your clients, whether it’s simply wishing them a “Happy Birthday” or communicating proactively about policy renewals. 

Also, identify the clients that don’t currently have a life insurance policy with you. Run AgencyBloc’s cross-sell report to identify all of the clients in your book that have health but not life insurance coverage with you. Then, work through the list or keep it top of mind when conducting renewal meetings for their other coverage.

Our Top Tip for Selling Life Insurance: Know Your Audience

The most important thing you can do to sell more life insurance? Know your audience–and you’re off to a great start! Understanding the reasons why people buy life insurance–and why they may be hesitant–can help you create an effective selling strategy. Keep the reasons we discussed above in mind as you talk to current or prospective clients, and use them to guide your conversations.

This blog was originally published on November 30, 2017, and has been most recently updated and republished on October 18, 2022.

Posted by Kelsey Rosauer on Tuesday, October 18, 2022 in Life Insurance

1. client retention
2. selling