How advisors can get clients to act sooner on life insurance

Image shows a man looking at a stack of forms. — Many Americans put off buying life insurance until it's too late. (AI-generated image)

By Anna Baluch

Despite knowing they need life insurance, many clients put it off.

In fact, a study by Ethos found that nearly 3 in 4 (72%) individuals wish they had started protecting their future sooner, while 70% knew life insurance mattered long before they actually purchased it.

“Even when people recognize the value of life insurance, they often struggle to see the urgency of it as day-to-day expenses often take precedence,” said Nichole Myers, chief underwriter at Ethos.

In many cases, the heavy focus on day-to-day survival paired with the discomfort of thinking about and planning for their own mortality often leads clients to continually put life insurance off for a future date.

“Nothing forces the decision. Taxes have a due date, and a mortgage has a closing date. Life insurance just sits there, so it loses every time it competes for attention,” explained Brendon DeRouin, co-CEO and managing partner at E4 Insurance Services.

Fortunately, advisors can step in and encourage clients to take action and lock in coverage sooner rather than later.

Common life insurance misconceptions

More often than not, clients delay a life insurance purchase because they think they’re too young and too healthy to need it.

“They view it as an unnecessary expense to take on earlier in life, and tend to sideline it in favor of investments with a more obvious and immediate return,” Myers explained.

However, this view causes them to overlook the fact that their age and health status actually put them in an especially advantageous position for securing a life insurance policy. After all, the cost of premiums tends to grow exponentially as we age.

In addition, most clients believe coverage is too expensive. In fact, LIMRA found that 40% overestimated what a basic 20-year term policy costs, and about half admitted their estimate was a gut feeling.

“Ironically, most people who give me a price objection have never been quoted,” DeRouin said.

How to convey the cost of waiting

Ideally, advisors would focus instead on the benefits of acting now.

Rather than trying to scare clients into thinking about what will happen to their dependents if they don’t get covered, advisors should clearly outline the benefits they and their dependents will gain if they secure coverage.

“By focusing on the concrete benefits that a life insurance policy can provide for clients today, insurance professionals can help interrupt the cycle of ‘I’ll get to it later’ that delays so many people from seeking coverage,” Myers said.

If a client says that they know they need life insurance but aren’t ready to act now, asking them why they think they need it can help redirect the conversation on their values and long–term goals.

“This gives advisors the opportunity to clearly demonstrate how a life insurance policy can support those goals,” Myers explained.

DeRouin suggests simply showing some math to get the point across.

“Run the same policy at their age today and at their age in three years and five years, put the numbers side by side, and then be quiet,” DeRouin said.

In addition, advisors should explain that while a client can lock in today’s rate for the next 20 years and cancel any time they want, they can't go back and buy a health class you no longer have.

“That’s simply how underwriting works, and it can be more impactful than anything dramatic,” DeRouin added.

If a client says they’ll “get to it later,” starting the application with them right there may help.

“Ten minutes, nothing binding, no money changes hands, and they can walk away when the offer comes back,” DeRouin explained.

It works because underwriting creates the deadline the client never will. Requirements come due, the carrier follows up, and the offer expires.

“The process starts doing some of the chasing for advisors,” DeRouin added.