Overcoming 4 common reasons why people don’t buy insurance

Sometimes, due to preconceived ideas, prospects and clients do not think they need life insurance or other types of insurance. They then reject financial advisors and life insurance agents who approach them

Here are some reasons why you might experience a lack of interest from clients in insurance, and seven-year MDRT member Oi Tung Lee, of Kowloon, Hong Kong, China, advises what to do about it.

1. Failure to understand the importance and value of the proposal. Sometimes clients lack sufficient understanding of the relevant insurance policies and what they can do for them and their loved ones.

What you can do: Provide clients with additional information. Before offering them suggestions, though, fully understand the contents of insurance plans and other relevant market information so you can respond with well-prepared answers to clients’ questions. This helps clients feel more confident in taking out insurance, Lee said.

2. Lack of perceived urgency to insure. If clients have a false sense of optimism thinking they will not be in an accident or suffer a serious illness, they will ignore the need to buy insurance.

What you can do: Share stories and information. Lee had recommended a critical illness insurance plan to a 27-year-old client who, like other young clients, believed he was too young to suffer from a serious illness at his age. So, he did not want to buy insurance. Lee, however, kept in touch with the client. She regularly shared practical information with him, such as waiting times for public and private hospitals and cancer statistics, to make the client aware of the importance of purchasing critical illness insurance. After a few months, the client purchased insurance.

3. Lack of confidence in financial advisors. This is especially true when life insurance agents and financial advisors are in contact with potential or new clients.

What you can do: Lee suggests understanding a client’s background, expectations, financial situation, needs and beliefs before providing suggestions and plans for clients to choose from.

4. Fear of having an “orphan policy.” Clients may be concerned that if the life insurance agent quits, the relevant policy inquiries, compensation, renewal and other matters will be unmanaged, and they will lose protection. They then choose not to take advice from new life insurance agents they do not have confidence in.

What you can do: More time and sincerity are required for advisors to establish a professional and reliable image to increase client confidence in them. Build a relationship with the client by sending holiday greetings, checking in regularly and offering advice at the appropriate times. This approach takes patience and time though. Meanwhile, said Lee, “reach out to other new prospects to build your experience and improve the possibility of future clients.”

Always maintain a positive and sincere attitude, said Lee. Even if the client is initially wary, the advisor should continue to show they truly care about the client to increase the client’s confidence in the advisor.

Zilia Tam writes for Team Lewis. This was excerpted from an article originally published in Chinese on MDRT’s website.

For more ideas on how to overcome objections:

• Watch “Why objections really are questions”
• Read “10 steps to effective prospecting” (MDRT member-exclusive content)
• Read “10 responses to whole life insurance objections”