Picture this. Your best clients are John and Jane Smith. One day, you are sitting in your office, and the phone rings. You pick up the phone and it’s Jane Smith, who says, “I have some terrible news. John died last night. He was in a terrible car accident.”
After you express your sincere sympathies to Jane and her family, which one of the following responses best describes what you might say next?
1. Did John own any life insurance?
2. Let’s set a time to meet and review your best options to replace John’s income.
3. The good news is your investments were up more than 20 percent last year.
4. Remember, we talked about life insurance, but unfortunately you and John chose not to purchase this family protection.
5. The good news is part of our planning together included family protection for this kind of unexpected event. Let’s set a time to meet. Don’t worry, everything will be okay.
What is Your Job?
One of the most valuable lessons I have learned over the past 25 years is that, when you are investing your client’s monies or providing family protection through life insurance, 90 percent of our job is helping our clients avoid large losses.
Many financial professionals could argue that their main objective for their clients is creating wealth. However, I firmly believe a financial professional’s responsibility doesn’t begin or end there.
In other words, whether you are in the life insurance business or not, every financial professional should make sure that a discussion about life insurance takes place at some point.
FACT: Most Families are Living on the Edge
To emphasize why it is so important to talk about life insurance, I searched my archives and found an article from the Wall Street Journal entitled “More Go Without Life Insurance” in August of 2010:
According to a LIMRA survey in 2010:
More than one-third of all U.S. households have no life insurance (Note: This percentage was the highest in nearly 50 years, and has likely risen since 2010)
- More than 50 percent of U.S. households said they needed more life insurance
- More than 50 percent of U.S. households said they would have immediate trouble meeting living expenses if a primary wage earner died (Note: More than one-third said they would have trouble within six months)
- More than one-third of U.S. households rely on life insurance provided solely by an employer
- More than 85 percent of U.S. households said they do not know any credible person or place to seek help buying life insurance (Note: Approximately 80 percent do not have an insurance agent or broker)
Today’s historically high percentage of families without life insurance is a sign of increasing financial pressures. For example, as the economy continues to struggle, some of the issues facing families are:
- Tightening household budgets
- Loss of employer-provided coverage (largely due to increasing unemployment)
- Cutbacks from company benefits packages
- Baby boomers experiencing lapses in older Universal Life Policies
Hopefully, this article helps financial professionals identify and take advantage of three excellent life insurance opportunities that exist today:
1. Existing Client Reviews: A client review provides an excellent opportunity to either initiate a client review, or identify an opportunity. The harsh reality is that many financial professionals fail to discuss this necessary family protection and hence, a client review offers an excellent reason to meet, review things, and potentially add value. Also, client reviews provide the opportunity for any life insurance adjustments that may be appropriate.
2. Opening New Doors: As a result of increasing life expectancies and decreasing term prices, more and more agents are focusing on higher-income families who can afford bigger policies.
Currently, the life insurance industry is grappling with a steep decline (more than 33 percent in the past 40 years) in the number of life insurance agents who focus on middle-class families, defined by household incomes of between $35,000 and $100,000 a year.
The financial services and life insurance industries have not yet created an effective solution to help protect the middle-income households in a cost-effective way that enables them to feel comfortable buying life insurance.
3. Home Meetings with Seniors and Retirees: In the aforementioned 2010 LIMRA Survey, more than 60 percent of the “older generations” (baby boomers) prefer to buy life insurance on a face-to-face basis—and preferably in the comfort of their own home.
Since many of the older Universal Life policies are lapsing, or likely to lapse in the near future, this creates an excellent opportunity to meet with seniors and retirees to:
- Review and help them understand exactly what they own
- Discuss other options, if applicable and appropriate
- Possibly identify other areas of opportunity to assist
Life Insurance is a Necessary Discussion
This article clearly proves that, regardless of today’s U.S. households’ age or financial situation, there are far too many families who are living without the safety net that life insurance provides.
The legendary Hall of Fame Football Coach Vince Lombardi once said, “The key difference between failure and success is the amount of time and preparation in planning for the future.”
Life insurance is a necessary piece of a comprehensive financial or retirement plan, and is clearly worthy of our time and preparation.