General Life Insurance Topics
Why Did You Purchase Your Latest Life Insurance Policy
During the 42 years of my life insurance selling career, I was always intrigued by the response to these questions:
- Do you have life insurance and why? and
- If you were to purchase additional life insurance, why would you do it?
These two questions have caught the attention of researchers at the Life Insurance Marketing and Research Association (LIMRA), and in a research paper done in 2014 they revealed some interesting statistics as reported in www.gerberlife.com/blog/life-insurance-statistics-in-america/.
- 70% of households interviewed had some life insurance.
- 44% of the households had individually owned life insurance policies.
- The average amount of coverage for adults was $167,000, with women having 69% less face amount than men.
- With this being the case, the number of households saying they need more life insurance coverage was still 58 million.
- When individuals were asked why they hadn’t purchased more coverage, they admit they just haven’t got around to it.
- This next statistic should make a life insurance salesperson start salivating, 8% of the respondents considered themselves very likely or extremely likely to purchase life insurance in the next year. Nearly 1 out of 10 is excellent odds for sales.
Though there has been some movement toward purchasing life insurance from sources other than face to face conversations with life insurance salespersons, 16% of respondents said they likely would buy online–the personal contact is still preferred. Interestingly enough, 86% said they would use the internet to look into life insurance prior to seriously considering the purchase.
This brings us to the question, if you were to consider purchasing additional life insurance coverage, why would you do it?
Whether it is the first time an individual is purchasing life insurance or subsequent times, the motivation to purchase is driven by love, fear, or greed–love because you don’t want to burden someone with financial struggles, fear that you might suffer a loss, or greed to get something in return.
Along with these three major objectives, the following factors seem to affect people moving forward to answer the question, if you were to purchase additional life insurance why would you do it: breaking the purchase of life insurance down to markets of Seniors–anyone born before 1946; Boomers, born between 1946 and 1964; Millennials also noted as Gen X and Gen Y, born between 1961 and 2004, the following resonates with each group.
- All were concerned mostly about being certain they understood what they were buying;
- Ability to chat with a person–62% Seniors, 66% Boomers, 64% Gen X and 68% Millennials (chat meaning to use electronic devices to converse);
- Ability to pick insurance types from categories–65% Gen X, 67% Millennials, no % recorded for Seniors or Boomers;
- Easy to understand–89% Seniors, 87% Boomers, 80% Gen X, 79% Millennials;
- Company selling the policy is well known–64% for Seniors with no percentage recorded for other groups.
Another motivating factor for insurance sales people is that only half of those who wanted to review coverages or thought they might need more coverage actually shopped for life insurance. It appears it still takes an active salesperson to consummate the purchase of life insurance.
A very interesting paradigm has happened over the last 20 years. It used to be when respondents were asked if they had life insurance and why, the majority would respond with concerns of premature death, funeral expenses, or leaving behind an inheritance. In the 2014 study, nearly seven out of 10 selected money for a comfortable retirement as the reason, with less than 40% giving priority to premature death, funeral expenses, or leaving behind an inheritance. This should not have surprised the researchers as much as it did when one considers the societal shift away from traditional families and towards entitlement mentality.
It was also reported that 4 out of 10 households that have children, the mothers were either the only income earner or the primary earner.
Even though the market place has changed to concern for future monetary security, 41% of respondents state that a life event such as marriage, having children, buying a house with a mortgage, and purchasing a business still motivates them to consider life insurance coverage changes.
The concept of life insurance and what it can do is still one of the greatest achievements by mankind. As long as there are people who dream and have desires beyond their own life spans, life insurance will be there with the attendant question, why did you buy your latest life insurance policy?