Sometimes, helping my advisors sell life insurance is an uphill battle – with them and their clients. I know it’s not the sexy choice, and it’s not an exciting solution that’s going to help people make a million bucks. But, it does enable peace of mind, which can be more valuable in and of itself.
With many years behind the scenes and out in the field, I’ve heard a lot of excuses. But, many of them just aren’t true. Advisors and clients are relying on myths, not facts, when considering life insurance.
Ask your clients: Is the amount really enough to cover your needs? Can you keep your policy when you retire or change jobs?
Many employers provide life insurance equal to one to two times the employee’s annual salary, and they may be able to purchase up to four to six times their salary. First of all, to replace a client’s income for their dependents, they typically need five to eight times their annual income – some experts even recommend 10 to 12 times. Second, their calculated “salary” doesn’t typically include commissions, bonuses, and second incomes. A needs analysis calculator can help you determine the amount of coverage your clients need.
Even if they do have enough insurance through their job, you’re clients will likely lose their coverage when they leave. That’s they should only include their employer’s policy in covering their needs if they can take it with them at affordable rates. Otherwise, consider it a bonus. Plus, they may be able to get a better deal on their own, especially if they’re young and/or in above average health.
Ask your clients: If your spouse works, how would you replace their income in your household budget? If your spouse stays at home, how would you replace their value in child care, cleaning and other household operations? What’s that add up to over several years?
Are you kidding me?! Spouses who earn less or are non-working are extremely important, and their contribution to your household needs to be protected. If you haven’t already, you should read my colleague Sharlene Woerther’s blog for more information on why spouses need life insurance.
This is yet another reason why it’s so important to do a needs analysis with your clients. Once it’s been put to paper, it’s amazing how many people see the value in their spouse’s contributions. Insuring a spouse also gives the remaining parent the opportunity to take time off work and help the family adjust to their loss.
Ask your clients: What do you spend on soda and snacks in a month? Could you give that up to protect the ones you love?
I use to tell clients that often times you can get life insurance for what amounts to a bag of chips and pop a day. Since then I’ve changed my diet, so I no longer buy those things anyway … but I wasn’t too far off with my estimates. You should run a quick quote for your clients and show them the real costs!
A study conducted by Life Happens and LIMRA found that 30 percent of Americans acknowledge their need for more life insurance, but only 10 percent planned to purchase it within the next year. The main reason given was cost, with 65 percent saying that it’s too expensive. However, 80 percent of them overestimated the cost. While the cost for a health 30-year-old would be about $160 a year, the average estimate was nearly twice as high.
Ask your clients: Are your conditions under control? When was the last time you looked into coverage?
Don’t worry if your clients aren’t able to run a marathon or keep up with a fitness video on TV – they don’t have to be perfectly fit to qualify. Yes, the healthiest people pay the lowest premiums, but the life insurance industry has come a long way I just a few years. Many who were deemed uninsurable in the past can now receive coverage.
A lot of companies cover a range of health conditions, and some even specialize in high-risk cases. Clients can also purchase a policy that is not medically underwritten at all – just be aware that they tend to be more expensive and have lower coverage limits.
Ask your clients: Do you know of someone who died too young? Have you ever seen a Go Fund Me page to raise money for a person’s family after they’ve died?
Social media is littered with examples of young families who’ve been impacted by the loss of a spouse or loved one under the age of 40. Accidents and illnesses can happen to anyone at any age.
The bottom line? If your clients have anyone who depends on them financially, they should have live insurance. Help debunk the myths and make sure they’re covered.
As a relationship manager at Ash Brokerage, Jason O’Barr is a teammate for advisors – identifying new sales opportunities, providing consultative and comprehensive insurance support services, and effectively helping advisors grow their businesses. With experience as a producer, a marketer and an internal wholesaler, he understands the process from the ground up.
© 2018 Ash Brokerage LLC.