Have you ever purchased a product because you were afraid of what would happened if you didn't? Many businesses in the United States thrive due to the emotional response of its customer base. One of the top emotional drivers is fear. Fear can mean big bucks for a business.

In Pictures: 5 Ways To Control Emotional Spending

Customers - from individuals to the federal government - will pay top dollar for products that make them feel more secure. Fears have increased in the general public about identity thieves, burglars, natural disasters and diseases. While these fears may be legitimate, it doesn't change the underlying fact that fear can be a big boost to a company's bottom line. Let's take a look at a few of the industries that profit by selling peace of mind.

Identity Theft Protection Services
Do you worry about your social security number being stolen and thieves running up fraudulent charges using your credit? You are not alone. Millions of Americans live in fear daily of having their identities stolen. According to a study by Javelin Research, approximately 11.2 million Americans were affected by identity theft in 2009. They estimated that identity thieves defrauded victims out of roughly $54 billion in 2009. Enter the fast-growing field of identity theft protection.

Identity theft protection has become a multi billion dollar market in a relatively short period of time. Identify theft protection agencies offer to keep your personal information private for a fee. Identity theft protection companies provide the following services: credit monitoring, credit protection, theft insurance, fraud protection. These services typically charge customers hundreds of dollars a year to protect customers from identity thieves. (Learn how to protect yourself; read Identity Theft: How To Avoid It.)

Flood Insurance
After the rise in natural disasters over the past few years, more Americans are buying flood insurance. Many people who lost their homes in 2005 to Hurricane Katrina were not reimbursed for damages because they did not have flood insurance. In 2006 homeowners in the mid-Atlantic region was hit with four straight days of rain that caused millions of dollars of damage. The flooding was so severe that one county in Maryland suffered tens of millions dollars of damage.

Fear of losing homes, cars, and personal possessions to flooding has led to more people buying flood insurance. According to the Associated Press, residents in states known for flooding such as Minnesota and North Dakota have been rushing to buy flood insurance ever since the serious floods in 2009. (Learn more about flood insurance in Preparing For Nature's Worst.)

Security Companies
Most of us have seen the Broadview Home Security commercial in which a guy kicks in the door on the house of a mother and daughter. The robber is startled by the blaring alarm system and runs off, and then a security company representative phones to send the police and comforts the mother. Commercials like these are standard operating procedure in the security business. Security companies use feelings of fear and vulnerability in their ads to sell security systems and surveillance equipment. So, does it work? AOL DailyFinance states that Broadview's "fourth-quarter revenue jumped 7.5% to $145.4 million, while sales for 2009 rose 6.2% to $565.1 million. Net income for last year rose an impressive 9.8% to $63.7 million." The security industry knows one simple fact, fear sells.

Flu Shots
The pharmaceutical industry thrives on the fears of individuals. Take the H1N1 swine flu for example. The swine flu is a legitimate virus that has affected almost 60 million people in the United States according to the Center for Disease Control (CDC). There have, however, been accusations that the severity of the virus has been overblown. The CDC estimates that 12,000 people have died in the U.S. from H1N1. This number is actually lower than the mortality rate from the seasonal flu. The Washington Post reports that the World Health Organization is being investigated to see if the organization exaggerated the effect of the virus to boost sales of the H1N1 vaccine.

The U.S. government used only 91 million of the 229 million doses of the swine flu vaccines that the government purchased. The swine flu program cost the United States $1.6 billion dollars with much of that money going to pharmaceutical companies.

For-Profit Education
During difficult economic times, people often go back to school to improve their chances for employment or to maintain their current jobs. Fear of losing their jobs drives many people back to the classroom, and enrollment in undergraduate and graduate degree programs has increased during the economic downturn. The biggest beneficiary of rising unemployment is the for-profit education industry. For-profit education is a multibillion dollar industry. Online universities like the University of Phoenix, Strayer, and DeVry are all experiencing double-digit growth in enrollment. Attendees at these institutions are improving their skills and knowledge to make themselves more attractive to prospective employers. (Learn more in Invest In Yourself With A College Education.)

The Bottom Line
As you can see from the examples above, selling security is big business. Companies that develop solutions that help assuage fears will continue to rake in the profits for the foreseeable future.

If you're still feeling uninformed, check out last week's business highlights in Water Cooler Finance: Auto Hope, Bubbling Oil and Obamanomics.

Related Articles
  1. Insurance

    Explaining Indemnity Insurance

    Indemnity insurance is an insurance policy that protects business owners and employees from losses due to failure to deliver expected services.
  2. Investing News

    This is the Fastest-Growing Consumer Complaint

    There’s no way to guarantee that your Social Security number won’t fall into the wrong hands. Here are some ways to make yourself less of a target.
  3. Professionals

    Prevent Employees From Hacking You Computer System

    Cyber security attacks from a current or ex-employee can cause a lot of pain. Here is how to avoid such attacks.
  4. Personal Finance

    Insider's Guide To The Top U.S. Business Schools

    The best business school for you depends on your skills, career goals and interests. We help future MBA's make a more informed choice.
  5. Professionals

    Who Needs to Take the Series 65?

    Most states require individuals to pass the Series 65 exam in order to act as investment advisors.
  6. Insurance

    Designer Clothes: Why You Need Special Insurance

    You spend a lot of money on couture creations. Shouldn't they be protected from damage?
  7. Insurance

    Airbnb Insurance: Will It Cover Enough?

    If a paying guest trips over a rug in your home, breaks an ankle and sues for damages, here's how to make sure your coverage protects you.
  8. Insurance

    5 (Possibly) Costly Risks of Being an Airbnb Host

    Guests who get injured or damage your neighbor’s property are just a couple of examples of what can go wrong. Here’s how to protect yourself.
  9. Home & Auto

    5 Mistakes to Avoid When Buying a New Home

    Learn about home ownership and some of the pitfalls a potential homebuyer faces. Understand five specific mistakes all homebuyers should avoid.
  10. Stock Analysis

    Why Did Tokio Marine Buy HCC Holdings for $7.5 Billion?

    Learn about the main reasons Tokio Marine paid $7.5 billion for HCC Holdings, including the strength of the company and a declining Japanese population.
  1. What is a value proposition canvas and how is it created?

    A value proposition canvas is a graphic tool created to help a business map out the key elements about its products or services ... Read Full Answer >>
  2. What is the difference between a peril and a hazard?

    The two related terms "peril" and "hazard" are often used in reference to the insurance industry. Essentially, a peril is ... Read Full Answer >>
  3. Can I use my IRA to pay for my college loans?

    If you are older than 59.5 and have been contributing to your IRA for more than five years, you may withdraw funds to pay ... Read Full Answer >>
  4. Can I use my 401(k) to pay for my college loans?

    If you are over 59.5, or separate from your plan-sponsoring employer after age 55, you are free to use your 401(k) to pay ... Read Full Answer >>
  5. What are the main factors that impact share prices in the insurance sector?

    The main factors that impact share prices in the insurance sector are interest rates, earnings and actuarial risk. In the ... Read Full Answer >>
  6. Why do insurance policies have deductibles?

    Insurance policies have deductibles for behavioral and financial reasons. Moral Hazards Deductibles mitigate the behavioral ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!