Selling Life Insurance in the Crowdfunding Era
Technology has made it easy to ask for money. Fundraising used to be the domain of schools, clubs, and other community organizations. Now, anyone with an idea and an internet connection can ask for financial support through a crowdfunding site. But what does crowdfunding have to do with selling life insurance? You might be surprised.

Why Crowdfunding Matters to Your Clients

The rise in charitable giving is hard to ignore.  According to, American charitable giving has increased for six straight years. It topped $373 billion in 2015. That’s more than the fiscal year revenue for corporate giants like Samsung ($305 billion) and Apple ($234 billion).* It’s also more than the individual GDPs of Denmark, Singapore, Ireland, or New Zealand.**

Charity is big business:

$2,974: The average annual household contribution to charitable causes or organizations in 2015. – National Philanthropic Trust: Charitable Giving Statistics

In these days of endless negative news cycles, acts of charity still get our attention. Case in point: The Giving Pledge, a commitment by wealthy individuals to give away most of their wealth. The pledge boasts such famous names as Michael Bloomberg, Richard Branson, Warren Buffett, Larry Ellison, Bill Gates, George Lucas, and Mark Zuckerberg.

But it’s not just the top tax bracket doing their part. Micro-lending and crowdsourcing give regular people the opportunity to help anyone. We can support farmers in developing countries, or college students with a great idea for a short film, or both. It’s an empowering feeling – but it can also be a dangerous one.

Why is it dangerous, you ask?

Because an increasing number of people are using crowdfunding after disaster strikes instead of seeking out options beforehand.

$7,000: Average successful crowdfunding campaign  - Crowdfunding Statistics

Why Crowdfunding Matters to Life Insurance Agents

You may have seen a recent InsuranceNewsNet article where the author searched for the phrase “no life insurance” on several popular crowdfunding sites. Her results were surprising—30,000 results on one site. The same search repeated just a few weeks later yielded 33,000 results.

That’s 3,000 more families who didn’t have life insurance.

These campaigns are painful to see. They’re created by families in emotional and financial turmoil. Crowdfunding in situations like this is usually a last resort. Not surprisingly, they feel they have no other option when it comes to paying for a funeral, burial, or medical treatment for a seriously ill loved one.

We sell products designed to keep this situation from happening.

What went wrong?

Reward & donation crowdfunding – donations to other individuals, not businesses – raised $5.5 billion in 2015. - Massolution Crowdfunding Industry Report 2015

Life Insurance Is Still the Answer

You probably agree that crowdfunding isn’t a replacement for life insurance.

If you have prospects who don’t agree, it may be because they haven’t considered these reasons:

  • A life insurance death benefit is not taxed. The beneficiaries receive the full sum, 100% income-tax free. The tax implications of crowdfunding are uncertain at best. Is it income? Is it a nontaxable gift? Do CPAs know how to handle it? Is this something you want to have to worry about later? No.
  • Some crowdsourcing platforms keep a percentage of the proceeds raised.
    • IndieGoGo: Keeps 5% of the proceeds.
    • Keeps 0% of the proceeds.
    • GoFundMe: Keeps 5% of the proceeds.
    • YouCaring: Keeps 0% of the proceeds.
    • GiveForward: Keeps 5% of the proceeds.
  • Every crowdsourcing platform needs a third-party payment processor, like PayPal or Stripe. So far, there is always a fee for this.
    • IndieGoGo: 3% + 30c; PayPal fees range from 3 – 5%.
    • 3% + 30c; PayPal fees range from 3 – 5%.
    • GoFundMe: 2.9% + .30c.
    • YouCaring: 2.9% + 30c.
    • GiveForward: 2.9% + 30c.
  • Does the recipient offer a reward for contributors? It's most common in creative and startup campaigns, but it’s not unusual for recipients to offer a thank-you to their contributors. Usually, it’s something they made, or a service they can offer in kind. Depending on the gift's monetary value, the IRS might view their campaign as a business venture. That changes the tax implications. In contrast, you don't have to worry about this with life insurance.
By 2016, crowdfunding will surpass venture capital in terms of funds given per year. – Trends Show Crowdfunding To Surpass VC In 2016

Selling Life Insurance with a Charitable Giving Story

So how do you build a sales approach that reinforces the benefits of life insurance…with the feel-good vibes of a charitable giving story?

You flip the script.

In this version, you’re not selling a thing.

You’re creating a feeling.

You’re acknowledging a prospect’s desire to do good.

But in this case, you're telling them they can do the most good at home. You're asking them to treat life insurance like a closer-to-home version of global social responsibility. After all, the slogan for Indiegogo, a leading crowdfunding platform is, “Fund what matters to you.” What matters more than the hopes and dreams of their children?

We’ve talked before about using social media for research purposes. When you have a prospect who shares crowdfunding campaigns or posts about social causes, consider using a revised sales pitch that incorporates the motivations of a charitable giving campaign.

Baby Boomers and seniors donate most often to places of worship. Gen Xers and Millennials donate most often to kids and youth programs. –Nonprofit Tech for Good: 20 Must-Know Fundraising and Social Media Stats

How to Revise Your Sales Script

The first step? Tweak your vocabulary.

Let’s take a quick look at some of the words and phrases that appear prominently on crowdfunding sites:

  • Human goodness
  • Socially minded
  • Overcome, heal, and thrive
  • About compassion
  • Ways to help
  • Take action
  • Enabling
  • The spirit of generosity
  • Change lives
  • Give and receive support
  • When someone you love is facing a challenge

Are you surprised that all of these apply to life insurance?

We’re not.

But your clients might be.

Crowdfunding is expected to grow 26.87% between 2016 and 2020. – Global Crowdfunding Market 2016-2020

Notice that none of these phrases use the words “money” or “financial” or “stress” or “protection” or “death.” Those are scary words for your prospects.

But you know what isn’t scary?

Being generous. Changing lives. Helping loved ones heal.

That’s what life insurance needs to be about for them. They’re not buying a product - they’re supporting their spouse’s future. They’re not providing financial security - they’re empowering their kids to follow those dreams, no matter what.

Using this type of sales script could come in handy if you’re prospecting at charity events, in community outreach programs, volunteer organizations, or fundraisers sponsored by non-profit organizations.

Connect with Prospects

There’s no doubt that crowdfunding platforms are appealing. They help someone accomplish an extraordinary goal, something they couldn’t afford to do on their own.

It’s our job to help people see that’s what life insurance does. It helps our loved ones accomplish extraordinary things without the funding they need—your household contributions.

You have clients who believe in the principles of giving.

Life insurance is about giving to the next generation.

Make that connection, and you can make the sale.

Want more sales strategies, tools, and tech tips? Become a Pinney Partner and find out how working with a better BGA can grow your business.

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References for GDP/company revenue:
Largest companies by revenue List of countries by GDP