How insurance riders maximize coverage without breaking budgets

By Scott Fligel

When purchasing a new car, you likely have a few must-have features. Maybe you need at least six seats to fit your family, a tow hitch for a boat or you just prefer a certain brand.

You can always add on more bells and whistles, like a sunroof or heated seats, based on the available budget. Something similar exists when helping clients with financial planning. When evaluating different risk management options, insurance riders that offer additional benefits have become increasingly popular.

Which rider is best?

The best tool an advisor has is a listening ear. No matter the client, what you learn about their life and values informs each step of the financial planning process. When developing an insurance policy that would benefit from a rider, consider what benefit the client stands to gain and how it fits into their vision.

Is it helping them achieve a goal that has already been established, or do you see an opportunity for additional protection? Or on the other hand, would their budget be better used elsewhere?

Identifying the client’s goals for coverage helps determine which rider best meets their needs. For example, when it comes to life insurance policies, clients are usually aiming to protect their loved ones through a death benefit.

If this client’s greatest asset is their ability to earn an income, a disability or long-term care (LTC) rider could also help them support loved ones should that asset disappear. Keep in mind that this need will likely change over time. You will navigate these planning questions easily if you keep the client’s needs at the center of each conversation.

Breaking down the policy

Understanding your client’s familiarity with certain financial planning topics will guide how you enhance their overall financial knowledge. Would they prefer to see an illustration, or would they rather hear a broad overview of the impact of the recommendation?

Prove yourself a trusted partner in their financial journey – provide realistic advice and break down the concepts of insurance coverage in a way that is applicable to their life.

For example, if they are considering the value of a long-term care insurance rider on their life insurance policy, you can illustrate the effect of the coverage with simple questions. What happens if they don’t add the rider? What alternative options exist? If clients can confidently understand the value of a rider, they will feel comfortable making a decision.

As with any part of the financial plan, tailoring your approach to the client is a crucial part of an advisor’s work. This builds trust as you show the client you care about them as a person. By finetuning insurance products to meet their exact needs, you will make clients more likely to continue seeking your financial advice and encouraging others to do the same.

About the Author
Scott Fligel, CFP®, ChFC®, CLU®, AEP®, is a 26-year MDRT member with five Top of the Table qualifications. Scott is the owner of FA Wealth Advisors, a wealth advisory firm affiliated with Northwestern Mutual. Scott and his team are dedicated to creating a sound financial plan, tailored to personal needs, through a consistent and steadfast commitment to each client served.