Life insurance helps families maintain peace of mind and financial security in the event they lose a loved one. A recent study from LIMRA found that only 52% of consumers reported owning life insurance. So it’s key that agents highlight that it is a responsible, guaranteed way to take care of your loved ones after they are no longer here to do so. Agents will also want to ensure customers who don’t yet have life insurance and current policyholders know and fully understand their policy.
In recognition of Life Insurance Awareness Month, here are some key reasons to keep in mind and reinforce with clients when discussing life insurance policies to help remind and educate them on the important part it plays in securing one's financial future.
Emphasizing the ease
Purchasing life insurance is actually quite simple. Meeting with a trusted insurance agent or financial advisor, discussing specific needs and selecting the appropriate policy are all it takes. We should always remind clients that it is generally a simple application process followed by an underwriter's review of medical history to determine if an application is acceptable, and to identify the client’s risk classification. Once their policy is in force, they then pay regular premiums on a monthly, quarterly or yearly basis to keep their policy active. Keep your messaging simple.
Options and opportunities
One size doesn’t fit all. Having clients recognize the importance of life insurance is the first step. Once complete, it’s important to educate them on the common types available and what makes the most sense for them. Spending time reviewing their situation and creating tailored solutions for your clients will go a long way.
Affordability of life insurance
A common misconception about life insurance is that it comes at a hefty cost. According to a study by LIMRA and Life Happens, eight out of 10 consumers overestimate the expense of getting a life insurance policy. While we know a few uncontrollable factors like age and gender can increase or decrease rates, it is imperative to share with clients that the average cost of coverage can generally be affordable.
Lifelong protection with life insurance
Permanent life insurance and term life insurance have one sure thing in common: They both pay a death benefit when the covered person passes away. Beneficiaries can use these benefits to replace income, pay off debts, leave a legacy, etc., and it is important to remind people of this fact.
Life insurance can offer flexibility
Some policies allow flexible premiums and death benefits, providing the opportunity to decide how fast or slow to grow the value. Emphasizing this helps take the pressure off hitting minimum or maximum payments.
Accumulation cash value
Policyholders are often met with some conventional advantages of having life insurance, such as the potential to take out policy loans without paying taxes when their policy remains in force. Over time, the cash value accumulates (in many cases tax-deferred) allowing another level of financial security for holders and loved ones to fall back on.
Cash value access
The accumulation of cash value comes with the opportunity to access that cash value for any purpose. The potential to borrow from a policy’s cash value as needed to help fund college, pay off debt, supplement retirement income and more is an important benefit some may not know about – and a critical resource to highlight to clients in times of financial need.
Generally, once the policyholder dies, death benefits are tax-free to those named beneficiaries and often avoid probate. This helps to create a legacy for loved ones and ensure they are not left with financial burdens during a difficult time. This can be a comforting point to reinforce in your conversations with clients.
Studies by LIMRA have found that an estimated more than 100 million Americans are either underinsured or completely uninsured. And as important as life insurance is, some people understandably find the topic to be confusing. Life insurance companies often assume consumers understand terms that they themselves use all the time as professionals, but that isn’t always the case. It’s important for us to remember that knowledge is power – so educating and listening to clients should be at the forefront of our conversations. Simply having a policy does not necessarily equate to adequate coverage, and having life insurance doesn’t mean understanding life insurance.
Life Insurance Awareness Month is the perfect reminder that providing ample information and education allows clients to make the right decisions for them and their financial situation as we guide them to choose the insurance coverage that is right for them.
Nathan Richardson is senior vice president, consumer division, CNO Financial Group. Contact him at [email protected].