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Agents Help Boomers Find Planning And Life Insurance Dollars

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Agents in the field have repeatedly told National Underwriter that very few members of the baby boomer market have done any retirement planning at all (see NU, Oct. 27).

Part of the reason is that many boomers, especially the younger segment, “want everything nownot just the house but the big house and the expensive cars,” says James Jacobs, a financial advisor with Jacobs Financial Group, Chesterfield, Va.

Jacobs notes that its not that boomers dont want to do any financial planning, they just dont have any money left over after all their expenses. Many of these boomers face the same shortfall of cash when it comes to their life insurance planning.

“The problem is if you ask the average person to spend $400 a month on a car payment they say no problem, but if you ask them to spend that same amount on a life contract, theyll look at you like youre nuts,” adds David Bryant, an agent with Farmers Financial Solutions, Tulsa, Okla.

“The good news is that people are more realistic about their insurance needstheyre buying much more coverage,” says Bryant.

Even though these boomers are strapped for cash at the end of the day, they are buying the coverage they need to provide for their family. That coverage is coming in the form of low cost level term insurance and/or universal life coverage.

In a typical scenario, Bryant explains, a 45-year-old male who needs $500,000 of coverage can buy a 20-year guaranteed term product for about $90 a month. For that same amount of protection in a permanent type of product it may cost him $600 a month, he says.

“With the additional financial pressures theyre faced with, its an easy decision,” he says.

Its the agents responsibility to explain the pros and cons between term and permanent insurance, explains Bryant, but whats really important is that the right amount of coverage is placed when its needed. Even though many boomers will have to revisit their life insurance needs in later years when their term policies may be about to expire, “you have to provide and sell a death benefit based on if they die tonight,” he says.

While many of the younger boomers feel that they do not have the disposable income left over at the end of the month to afford a permanent life insurance contract, one creative way Bryant uses to help them find the necessary funds is to “ask people what they spend on dinner out one night a week. If you eliminate a night of dining out every week, you can afford a permanent life contract and your lifestyle truly wont change,” he says.

When it comes to retirement planning, many of these older boomers are expecting to be part of the greatest transfer of wealth from their parents generation. Some may even feel that with their parents inheritance they will have ample wealth to live on through their own retirements.

While this is always a factor to consider when developing a financial plan, Jacobs doesnt recommend boomers put all their faith in their parents wealth. “I would hate to be one thinking that Ive got to wait for my parents to die to get money because its never as much as you think its going to be,” he says. “Its just poor planning.”

With the new rules around 401(k) contributions, Jacobs explains that these boomers do have the money to save for their own retirement right now. The problem is many of them dont understand the tax savings realized when making pre-tax contributions to their retirement accounts. “Its an education process,” he says.

For example, Jacobs was working with a boomer who was not putting the maximum amount into his 401(k) plan because with all his other expenses he felt he couldnt afford it. “I pulled the tax table out and showed him that if he increased his contribution it would put him in a lower tax bracketthe tax savings alone would end up covering the amount of his contribution. He wouldnt see a lot of difference in his take-home pay,” he says.

Reproduced from National Underwriter Life & Health/Financial Services Edition, November 21, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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