The Psychology of Buying Insurance

The Psychology of Buying Insurance text overlaying an image of a head with a spiral in the brainThe psychology of human beings plays a central role in the complex process of selling insurance. As an insurance agent, it is your job to meet people and encourage them to purchase policies. But whether or not you close a sale comes down to much more than customer service. Every time that someone purchases a coverage plan, it is the result of a mix between their feelings, justifications, and cognitive process. With that said, to be a successful agent in the competitive market we live in, you must be able to understand the psychology behind every customer you interact with.


By effectively tapping into the way consumers think, you’ll be able to build stronger relationships, deal with their concerns more effectively and close more sales. In order to fully understand your client’s thoughts and the reasoning behind those thoughts, you must first explore the mindset of the average consumer. Only then will you be able to navigate buyer hesitation and grow your pool of satisfied clients. 

Analyzing the Consumer State of Mind 

If you can understand the psychological factors that influence how consumers approach purchasing insurance, you’ll be able to shape your sales tactics specifically based on their concerns. While no two consumers are exactly the same. There are some generalities to keep in mind to give yourself the best shot at closing every potential sale. 

The Perception of Risk

The main purpose of purchasing an insurance policy is to reduce risk. When thinking about risk, most consumers will think about the possibility of an adverse event taking place. This could include things like accidents, property damage, illnesses and more. How the consumer you’re dealing with perceives risks will have a large impact on whether or not they decide to buy insurance. In general, their own experiences, stories from their peers, the media, and other factors all contribute to their view of risk. For example, someone who spent their teenage years sick in the hospital will likely view insurance as more important than someone who’s never been sick a day in their life. 

Loss Aversion

Loss aversion is defined as the cognitive bias that explains why for humans, the pain associated with loss is psychologically twice as powerful as the pleasure of gaining. This psychology phenomenon plays an important role in the insurance consumer’s decision-making process. What this really means is that your average client will be more concerned about a potential loss that could take place if they don’t have insurance. Over simply the cost of the policy’s premium. While agents often like to highlight their low price points. Loss aversion tells us that it may be wiser to focus on the potential downfalls of not having insurance.

Decision Overload 

When someone is faced with too many options to choose from, they often become hesitant to make a decision at all. Due to the fear of making the wrong choice. In psychology this can be referred to as decision paralysis. The truth of the matter is, when it comes to selling insurance, there are always going to be a plethora of decisions that the consumer must face. But it’s your job to make things as simple as possible for them. During the sales process, keep in mind that for most people, insurance is like a second language. To make sure they don’t feel overwhelmed, try to guide them in the direction of an option that fits their needs. Sometimes a simple suggestion will put them at ease and rid them of buyer anxiety. 

Importance of Trust 

As an agent, you should never undervalue the importance of trust. Clients want to know that their future insurance carrier is going to stay true to what is promised during the sales process. To stay consistent with this line of thinking, it’s your job to be transparent about policy details. And refrain from exaggerating or offering things you can’t live up to. It’s also a great idea to be as available as possible during the decision-making period. 

Overcoming Buyer Hesitation 

Now with a firm understanding of the psychology factors that contribute to a consumer’s buying process, you can now put to use a variety of strategies to help combat buyer hesitation.


The more a consumer understands about the policy options you’re offering, the more confident they will be in purchasing. When explaining coverage details, it’s important for you to frequently check in. To make sure they are comprehending everything you’re laying out. People tend to think about insurance as another bill or expense to pay. You need to work to help them understand the true value of the coverage, so that they’ll instead look at it like an investment. It may also be helpful to share other resources with them such as infographics, videos, or pamphlets. 

Customize Your Approach 

Every customer has different needs and different hesitations that need to be addressed. When in the sales process, take the time to carefully listen to the clients’ specifications. Such as their individual circumstances, budgets, and conditions. With a solid grasp of what they’re looking for, you can be empathetic to them. And tailor your sales approach depending on what they’ve explained to you. By taking the time to show that you care about their needs and concerns, clients will likely trust you more, knowing that you’re not just trying to make a sale. 

Showcase Satisfied Customers

Another way to encourage clients to purchase a policy is to show them proof of success. Some ways to do this include showing them testimonials, customer reviews, or stories of a satisfied client. By giving them social examples, you will effectively establish credibility. Sometimes all a consumer needs to see is tangible evidence, so why not give it to them?

Incentivize Them with Benefits 

In addition to the main coverage that is being offered. It will pay off to highlight any added benefits that they might find enticing. Think about things like discounts, rewards, supplemental coverage options. Or anything else beyond the core policy that could encourage them to make a purchase. Extra added value could be the tipping point that makes them pounce on a policy.

Consider Trial Periods

While this may not be an option for some insurance products. If applicable, offering consumers a trial period gives them a glance at what being insured looks like. Trial periods can be very helpful, as they allow clients to benefit from insurance coverage for a short time. Instead of having to commit for a longer period. When offering trial periods, be sure to clearly explain the details and terms of the policy. 

Provide a Sense of Urgency 

A consumer who’s considering making a purchase is in a delicate state of mind. You never want to feel pushy, or pressure someone into buying a policy. But at the same time, you don’t want to be too lackadaisical. A good middle ground is to introduce a sense of urgency to the person you’re working with. But in a gentle manner. Try using real examples if possible that show the benefit of acting now, instead of waiting until it’s too late. One psychology technique is to hone in on life changing scenarios or specific risk factors that could impact them greatly if they aren’t insured. By presenting insurance as a need for the right now instead of for the future, buyers will be more likely to make a buying decision. 

Address their Biggest Concerns First 

Another approach that can give clients a sense of confidence is to address their biggest concerns upfront. Whether it’s worrying about coverage limits, premiums, or other out-of-pocket expenses, your willingness to address the issue will ensure that you’re committed to an open conversation. Always be transparent in your answers, so that there are never unexpected factors that come up for your client later down the road. Anticipating concerns and getting ahead of them before they cause major hesitation, will make the sales process that much easier for you. 

Uphold Your Current Relationships 

While navigating hesitancy of new leads takes up a lot of time, you should never forget about the long-term relationships that you’ve established in the past. It’s important to never become complacent with your current clients because even if they are dedicated to you, they still need periodic check-ins, to make sure that they’re fairing well with their current coverage. Take the time a few times a year to contact your clients, asking them to do a policy review, or if there is anything that would make their experience better. You’ve already put the work in to gain these people as clients, so it’s important that you keep a strong rapport with them to encourage renewals into the future. 

Wrap Up 

While some consumers may come to you with their specific needs and concerns in mind, others may be more difficult to read. In order to fully understand the mindset of the average person looking for insurance, you need to learn about their psychology. There are many reasons why a buyer can be hesitant about making a purchase. It could be how they perceive risks, or maybe they feel overwhelmed with all the options at hand. Regardless of what’s holding them up, it’s your job to navigate these hesitancies and make them feel assured and confident in their purchase.


To combat these concerns, use tactics like a customized approach, educational resources, incentivization with benefits, or fostering a sense of urgency. Every client is different from the next, but it’s your job to use psychology to get inside their brain, pinpoint their anxieties, and work with them to overcome these thoughts. All of these psychology concepts and tips will help you to be a better agent and make more impactful relationships. If you’re an insurance agent who’s looking to talk to more interested consumers, and close more deals, Benepath has got you covered.


We specialize in insurance lead generation, that can help you expand your pool of clients, and grow your profits. All of our leads are exclusive and produced in real-time. Limiting the competition and giving you the best chance at success. We offer both data leads and inbound phone calls in various verticals. Including individual health, group health, Medicare, life and commercial insurance. If you’re interested in our lead generation services or simply want to learn more. Fill out a form or give us a call at 888-684-3121.

About The Author: Cassandra Love

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