Why Don’t People Trust Insurance Companies?

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The very idea of insurance is based around trust. At its core, you are trusting the insurance company that when something happens (in the case of life insurance, your passing away) they will pay out the agreed amount to your loved ones.

That thread of trust goes back to the very dawn of insurance. In ancient Chinese times, shipping merchants would work together to spread their cargo across multiple boats – that way, if one were lost, no one merchant would lose his entire worth. They trusted each other with their livelihoods.

With the reliance on contracts, modern thinking becomes a bit more direct – with the threat of legal backup replacing the simple act of trusting. No doubt, there have been similar extra assurances reaching back through history, and those early Chinese sailors probably had something on paper (another early Chinese invention!) indicating consequences for anyone who broke with the agreement, but at its core, insurance has always been about trust.

So, why is it that people don’t trust insurance companies?

“They Won’t Pay Out!”

It’s a familiar cry – especially from those who don’t have (and often have never thought about) life insurance. There is, however, no evidence for it, just the self-assured cry of the naysayer. In fact, life insurance claims have an astonishingly high 97%+ pay out record! That’s even more impressive when you take into account the fact that the majority of the missing 2-3% are made out of claims where the initial application was false in some way.

That’s right - the breakdown of trust came from the client, not the insurer!

“It’s Just Gambling!”

Yes, it is!

(You expected me to disagree with that, didn’t you?)

It is a gamble, but it’s a gamble with a win-win scenario for the policyholder. Let’s take a look at a LTA (Level Term Assurance) policy, say £300,000 over 20 years.

For ease of numbers, let’s assume the premium on such a policy was £60 per month.

Over one year, the insured party has paid £720 in premiums.
Over twenty years (the entire policy), that’s £14,400.

That’s it – total! There is no way that the insurance company can ‘win’ in this situation unless you live past the term and they don’t have to pay out the policy. It would make absolutely no sense for them to even offer it to you without that gamble.

They’re gambling their £300,000 stake against your £14,400 on the basis that they don’t think you’ll die in the next 20 years. If they’re right, they get to keep your £14,400.

If they’re right – everybody wins, because you’re still alive!

It’s hard to emphasise this enough, but not dying is winning – after all, the alternative is dying, and there are few enough situations where dying can be seen as winning anything at all.

They win their £14,400. You win because you’re still alive.

And the sadder scenario? The insurers lose £300,000 to your family, and your family have that money to help them through their difficult time. You could consider that a win for your family, though they’d no doubt rather still have you.

Yes, it’s a gamble – their gamble. Luckily for all of us, more people live past their term agreement policy than don’t, and the insurance company can make some profit and stay in business to help families who have the worst thing happen to them.

They Sell You Things You Don’t Need

At Quick Quote Protect, we listen to you and find the policy that is most suitable for you. We cannot speak for any other company, but we have no desire to sell you anything you don’t need – we’d rather correctly help you find the things you do!

We know that it can be easy to feel pressured into getting a policy by unscrupulous sales people. If this has happened to you, remember that you can always cancel a policy and do not need to be tied to something ill-fitting. Give us a call today and we will listen to you and help you find a better fit – let us help you rebuilt that trust!

It’s Nameless and Faceless

We love the personal touch at Quick Quote Protect, from our policy of having people answer phones rather than machines, to our one-to-one advice service, we believe in treating each of our customers as individuals.

We listen to you, and with no bias, advise you on the best life insurance to fit your circumstances.

There’s no need for insurance to be nameless and faceless! It’s far from just cold forms filled out on the internet and sent into the void.

Bringing Back the Trust

Your life insurance is an important part of your financial portfolio. It is there to give you the peace of mind that your loved ones are provided for, should the worst happen.

Insurance companies are part of your team in giving you this security, and should be seen as friends, just like those ancient Chinese merchants – sharing the loan to ensure no one loss is wholly devastating.