What motivates people to buy life insurance today?


When it comes to the products and services that people buy, some purchase them because they ought to. Other consumers buy them because they want to. The rationales all depend upon the person and what’s being sold.

For life insurance, it’s a little bit of both. Life insurance is an important type of coverage to have because it helps pay for a variety of significant expenses that everyone will experience, such as end-of-life planning. Americans understand this, which is why an estimated 172 million adults in the country – according to estimates from LIMRA – have policies in place. In short, they buy because it’s something they should have.

Frequently, however, you can’t rely on potential clients buying coverage just because it’s highly recommended that they do so. There has to be some reason behind it so they truly want to purchase a policy. Understanding their motivations can help you turn potential leads into long-term customers by appealing to what affects them personally, financially or emotionally – or ideally, all three.

Here are some of a few of the overarching rationales for why many Americans these days own life insurance. You can use these motivations to inform your sales strategy:

Funeral expenses
End-of-life planning is perhaps the most well known aspect of life insurance, in terms of what the proceeds can go toward. According to analysis from LIMRA, 85 percent of owners cite burial and final expenses as at least one of the reasons why they own life insurance.

Although cremation, which is more affordable, is increasingly common – approximately 53 percent of Americans chose it in 2016, an all-time high that’s poised to reach 80 percent by 2035 at the current pace, according to the National Funeral Directors Association – standard burial remains among the most common end-of-life preferences in the United States.

The funeral and burial, however, are quite expensive, with the costs rising virtually every year. For instance, according to Parting.com, the average funeral in North America runs between $7,000 and $10,000, after taking into consideration funeral director services, the casket, embalming, grave site and headstone, among others.

Mourning woman with flower at gravesite. Burial expenses alone can run in the thousands of dollars.

The last thing people want to concern themselves with after the loss of loved one is not being able to afford to fulfill the wishes of the dearly departed. Life insurance takes care of it so family members don’t need to worry. People who buy coverage that will ultimately be used for them are to be commended, because life insurance protects his or her family members from any financial strain they may experience stemming from emergency expenses.

Appealing to your potential customers’ love of family may incentivize them to buy coverage. But even if they already have a policy, they may not have enough. Approximately 20 percent of Americans with life insurance acknowledge this fact, according to LIMRA; you can only imagine how high the rate is for those who aren’t aware that they’re not sufficiently covered.

With the average American living to the age of 78.6, according to the latest estimates from the Center for Disease Control and Prevention’s National Center for Health Statistics, more people are reconsidering when it is they’ll retire. Some are opting to stay in the workforce a bit longer as a result, while others are exiting it earlier, hoping to make the most of the time they have to share with their spouse, family and friends.

57% of Americans say they’ll rely on Social Security to help pay for retirement.”

Regardless, the reality of retirement largely depends on whether people can afford it. Given that more than 57 percent of Americans say Social Security is something they’ll rely on to pay for their retirement expenses, according to a poll conducted by Gallup, which suggests that many people may not be as financially prepared for their golden years as they ought to be.

“How much do I need to retire?” is a common question that produces a wide range of answers. Some say it should be at least 10 times that of your current salary to keep up with the standard of living you’re used to, while others point to a particular figure. It really boils down to the person, but increasingly, life insurance is one of the resources Americans use to supplement their retirement income, with 52 percent of respondents in the LIMRA study indicating as such, up from 38 percent in 2011.

Ironically, however, among those who don’t have life insurance, saving for retirement is pointed to as one of the most common reasons for why they’re not covered. It’s important to impress upon potential buyers that life insurance and retirement isn’t an “either or” deal. They can work in tandem.

Major life event
Life is made up of memories and moments, some more significant than others. These include marriage, children and first-time homeownership, just to name a few.

While these are the more enjoyable aspects, life can be filled with unpleasant surprises, particularly health scares. According to the CDC, over 790,000 Americans experience heart attacks each year. At 580,000, the vast majority of these are people’s first, with 210,000 repeat episodes.

Vikram Kamath, senior data scientist and director of analytics at LIMRA, said people are products of their experiences, so it’s incumbent upon producers – meaning insurance agents and providers – to be cognizant of the things that matter most to individuals.

“Significant life events get people thinking about what’s important to them,” Kamath explained. “Companies must be in tune with these behaviors in order to deliver a product consumers need, when they need it.”

Sixty-seven percent of Americans own life insurance to help replace lost wages should something happen that prevents them from earning a living. The mortgage tends to be the largest expense people take on in their lives, with the average home in the U.S. running approximately $257,700, according to the most recent data available from the National Association of Realtors. Life insurance can step in to pay down mortgage debt.

Like life experiences, motivations vary from person to person. By getting to know your clients and what matters most to them, you can determine what aspects to emphasize, spurring them to buy both because they need and want to.