There have been a plethora of reports and statistics over the last few years about the life insurance coverage gap in this country. These findings almost always reiterate what an opportunity the gap creates for people in life insurance sales without offering many precise hypotheses as to why it exists in the first place.
Efinancial, a national life insurance brokerage recently released a report, Seven Myths about Life Insurance. The report strives to identify and therefore dispel common misconceptions the public has about life insurance, allowing for sales professionals to allay fears and eliminate fallacies.
The first myth Efinancial identified was that life insurance is too expensive. This has been an easy and overused scapegoat for the industry to employ when confronted with dismal sales numbers. It has utilized it more and more since the financial crisis but now that the country and families for the most part are slowly getting back on their feet financially, it would behoove life insurance professional to dismiss rather than embrace this myth and explain to potential customers the sheer practicality of owning a policy. It should be explained that the cost and uncertainty that accompany not owning a policy is greater than the premiums they will be paying each month. Budgets in this country remain stretched rather thin; finding low-priced options that still provide financial stability should help sales professional overcome this hurdle.
The second myth identified is that single people and those without children do not need life insurance. It has always been a challenge to sell to single people and couples without children because for the most part they are young and the hubris and invincibility that accompany youth are a tough foe for the hypothetical tragedies that would leave loved ones saddled with debt. Sales professionals should understand the mindset of this demographic and explain the current costs of a funeral and the fact that credit card, student loan and car payments would be transferred to loved ones in the case of such an event.
The third myth or mindset rather, is that the sole provider for a family is the only one that needs to be covered. Many people believe that a stay-at-home parent is not bringing much, if any, income into the household and the loss of that parent would have a marginal effect on the finances of the family. What most people fail to grasp is the cost associated with running a household. Dave Ramsey, an expert in family finances estimates that it takes $35,000-$40,000 per year to replace a stay-at-home parent’s workload were they to die. Professional should have an easier time selling a life insurance policy that covers daily expenses for a family once this fallacy is dismissed.