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April 22, 2004 at 08:00 PM
Turbo-Charge Their Wealth
By
In the American classic “The Great Gatsby,” author F. Scott Fitzgerald wrote that the rich are different from the rest of us. In actuality, the affluent are similar to the rest of us in at least one respectwe all want to preserve our wealth. They just have more of it to preserve. Yet, despite their greater wealth, the financial priorities of high-net-worth individuals are not dissimilar to most peoplesinvestment return, tax efficiency and estate planning.
High-net-worth individuals typically are described as those whose net investable assets are $1 million or more and/or whose gross household income exceeds $250,000. Because they are a highly desirable market segment, affluent prospects are prominent on the radar of all financial services specialistsfinancial planners, investment advisors, stockbrokers and you, insurance professionals.
Unfortunately for those of us in the insurance industry, affluent customers are often not fully aware of the financial advantages that insurance products present. There is a lingering misperception that wealthy individuals can “self-insure” through a variety of financial instruments and therefore dont need life insurance. You know thats not true. The key lies in educating affluent customers and their other financial advisors that insurance products can “turbo-charge” wealth.
As is true with most clients, all high-net-worth individuals do not all have the same planning needs. For example, younger members of this group probably have life protection requirements as does any young family, but at a higher price point. High-net-worth individuals in the 55- to 65-year age bracket may be juggling multiple priorities. They may be planning for retirement at a time when they still have children in college or, perhaps, are embarking on a new business venture. As a result, despite their wealth, these boomers may be appropriate candidates for a life insurance policy with flexible premium features.
In short, the affluent market should not be viewed as a one-size-fits-all sales opportunity. If anything, the needs of high-net-worth individuals are likely to be more, not less, diverse than many other groups in the insurance marketplace.
As an insurance professional, you are aware of the benefits that insurance products can provide, and educating the affluent market about these advantages is your greatest business opportunity. This is your chance to grab the attention of high-net-worth clients by explaining how and why insurance products belong in a well-balanced portfolio, and how insurance products offer a range of choices that can meet their needs. For example, these potential clients might not realize the opportunities that a variable annuity can provide to create wealth while deferring all taxes until the money is withdrawn from their contract.
