At the end of the day, your clients’ No. 1 goal regarding life insurance should be obtaining coverage that fully meets their specific needs. However, assuming price will not also be a major concern is a naive outlook for producers to take.
With this in mind, insurance professionals can overcome potential challenges and convey value by helping clients attain the lowest rate possible.
Perceived costs putting clients off
Expense was cited as the primary barrier to purchasing life insurance by consumers in the 2014 Insurance Barometer Study from Life Happens and the Life Insurance Management Research Association. Sixty-three percent of respondents said they had not purchased some or more life insurance because they saw it as too expensive.
This echoes LIMRA’s 2013 research that found 30 percent of U.S. households had no life insurance at all. Among these consumers, 86 percent said they hadn’t bought life insurance because they thought it was too costly.
What raises rates?
One strategy producers can use to both help clients and build trust is to identify aspects of client lifestyles that may negatively impact their insurance rates.
For instance, a habit like smoking can play a major role in how much a client pays in life insurance premiums. Even users of electronic cigarettes may be surprised to find out how it can influence their rates.
According to the Munich American Reassurance Company, 9 out of 10 insurance underwriters classify e-cigarettes as the same as using tobacco.
“At the moment, there is no way to distinguish an e-cigarette user from a tobacco smoker via cotinine screening, a routine test for most insurance applicants,” Bill Moore, vice president of underwriting and medical for Munich American Reassurance Company, said in a media release. “While the long-term health risks associated with e-cigarettes remain unclear, most insurers are erring on the side of caution in order to appropriately price and manage risk.”
While some lifestyle factors may be difficult to change, such as employment and family history, others can be improved.
One example is dangerous hobbies. Clients who count skydiving, bungee jumping and white water rafting among their favorite past times can save on their insurance rates by limiting these activities.
General health is another factor that clients can revamp for lower insurance rates. A person with lower cholesterol and blood pressure is likely to pay less for coverage, after all.
Tailored coverage can make the difference
In addition to helping clients identify potential issues that could lead to higher rates, insurance producers can also illustrate how tailoring coverage to fit specific needs can help save money.
No two people’s insurance needs will be identical. While one person may want to incorporate life insurance as part of their estate planning for their children, another may want to utilize the cash value a life insurance policy can offer to help with retirement.
By focusing on products and services that meet unique objectives instead of going for a one-size-fits-all approach, producers can create a more effective, efficient and likely affordable insurance plan for clients.
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