Life insurance and public opinion – why people don’t buy insurance

There are thousands of articles on the internet which encourage investing in life insurance, home insurance, car insurance and other adjacent tools. Sadly, most of them aren’t particularly effective – people still don’t show too much interest in the topic, and when an insurance opportunity presents itself, they politely “close the door” and move on with their lives as if it never happened. Until the inevitable strikes and the memory of the insurance opportunity harks back. So, why do people say no to insurance? There are multiple causes – some are psychological, while other financial. Nevertheless, if one wants to say no to something, he will definitely find a reason to justify his action. Let us analyze the plausible motives. 

Firstly, insurance doesn’t have an immediate pay-out. You make regular payments in order for your loved ones to receive a lump sum of money in case the unfortunate happens, but you don’t get to “see” that money for yourself. For example, if faced with a choice between buying a very efficient motorcycle helmet and investing into an uninsured motorist policy, the common individual will usually opt for the first option. Why? Because he can see the helmet, he can touch it and he knows that it will protect him. Insurance is seen to be a promise of security – it doesn’t immediately affect the buyer; this aspect also leads to some people cancelling their existing policies: at some point, they don’t feel they need the insurance policy anymore, they see it as a futile investment and they opt for cancellation. 

Another factor is the current economy – the situation is similar to a paradox. The current economy should stimulate tools and investments such as life insurance: most common citizens live in financial insecurity – they don’t have savings accounts and don’t benefit from financial “safety” plans. These seem like great circumstances for buying insurance, don’t they? Well, people still don’t make such investments. They’ve lost the habit of saving money and once again, see such policies as being unnecessary. 

Last, but not least, people are aware of the fact that, when they’re presented an opportunity which seems to endorse their best interest, there’s usually a catch to it. They don’t fully trust the insurance industry, as they know that a business works on interest, and when speaking about the insurance market, the interest is usually based on the policyholder’s earnings and life savings –  hence the lack of trust. 

Insurance can be a great tool to protect your loved ones and you assets, and hopefully more people will come to this conclusion at a certain point. Smart investments, such as term life insurance or health insurance, can prove to be extremely useful. In order not to be disappointed and fully benefit from an insurance policy, you ought to do your research and understand insurance basics. If you do so, you’ll see that the reasons which support your buying smart insurance surpass the contra arguments. 

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