How to frame insurance conversations with first-time homebuyers

Buying a first home is thrilling — but it can also be a bit overwhelming. After all, it’s a major life change and a legal and financial process that comes with a lengthy to-do list. That underscores how much homebuyers need an advisor’s support to address their insurance needs at this time, but also means it’s important to tread carefully.

“It can be an extremely daunting circumstance just because it’s too many potential moving parts or risks that [clients] don’t understand,” says Jason Allen, Senior Director, Business Development, Individual Life & Benefits, with Beneva. “Trying to incorporate insurance is another layer that people don’t necessarily want to consider.”

That said, most first-time homebuyers are making their biggest purchase to date. It’s exciting, but involves a lot of high-stakes decision-making. There are also risks associated with mortgages that advisors can help mitigate with insurance. Raising the topic in ways that parallel the homebuying journey can help clients move past the barriers of cognitive overload and decision fatigue.

“If you can make the client’s experience as enjoyable as possible, they’re not only a client — they become a centre of influence,” says Allen.

He points to five key moments that can prompt constructive insurance conversations.

1. Offer acceptance

When an offer is accepted, homebuyers often feel jubilant. They’ve succeeded! However, not long after that, Allen says many worry they’ve overextended themselves.

“The client is already afraid they might not be able to afford what they’ve gotten into, so trying to throw additional costs onto them is terrifying.”

He suggests framing the topic of insurance around the idea that they’ve just applied for a home and been accepted. Now, to protect loved ones from the new liability of a mortgage, they may want to make an offer to the insurance company to see if it accepts or makes a counteroffer.

This subtly underscores the message that insurance isn’t bought on demand, but applied for. In addition, it’s a process that isn’t instantaneous, so clients should get their application in early.

2. Home inspection

There’s a pause in excitement while the home inspection takes place. Will the inspector give the all clear?

“The inspector may find things you’re unaware of about the home you’re buying,” says Allen. “It doesn’t mean it’s a no, that it’s not a deal. It means the deal might be modified.”

Insurance can be thought of in the same way. Maybe the questionnaire, medical, or underwriting process shines light on a previously unknown aspect of health — but advisors can point out to clients that insurance carriers may find workarounds that help get protection in place anyway. Filling out the application form is the only way to get a definitive answer.

3. Mortgage approval

Mortgage approval moves clients forward to the next step. This moment also defines the amount of insurance required to cover the mortgage so loved ones aren’t left struggling to keep up the payments in the event of the homeowner’s death.

“Once you’ve committed to the debt, you should probably commit to protecting the debt so you don’t leave that liability to anyone else,” says Allen.

The key, he adds, isn’t to push on the pain point, but to help resolve it. Advisors can take the following tact: “You do require some insurance, but let’s try to minimize the cost and get the maximum value today. We can make modifications in the future.”

4. Closing date

The closing date often comes with a sense of relief, says Allen. On the day clients receive keys to their new home, they officially set the mortgage interest rate, duration, and payments. That certainty makes it easier to budget for insurance premiums.

This moment may provide an opening for advisors to talk about protection needs beyond the mortgage, because it’s likely clients still have outstanding concerns that insurance can solve. For example, they may worry about protecting their income in the event of death, disability, or a critical illness diagnosis.

“Alleviate those concerns…so people can truly just experience the joy of their new home.”

5. Moving in

As clients settle into their new home, advisors can touch base and propose a meeting to further broaden the scope of the conversation.

Allen suggests saying something like the following: “You’re moving in, you’re unpacking all your boxes, and you’re trying to put things away where they should be. Maybe it’s time to design what your financial future looks like, [too].”

This can be helpful to add, he says: “We don’t need to resolve absolutely everything, much like people will unpack one room that’s urgent, and leave other rooms that aren’t as urgent.”

The minimum viable coverage solution

Through every stage of homebuying, clients may feel overwhelmed and reluctant to engage in a comprehensive needs analysis. They may be more open to minimum viable coverage that meets the specific need of protecting the mortgage, with a planned follow-up to complete the process.

“Showcase the flexibility of the solutions you offer,” says Allen. “[Clients] don’t necessarily want to make a commitment for the rest of their lives in a time of uncertainty, [so] focus on ‘This is your stepping stone, this is your starting point, and I’ll guide you down the path.’ It’s not about a once-and-done environment for insurance anymore. It’s about a long-term partnership for the client’s financial security.”

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