Clients’ lives are constantly evolving. No sooner does it seem that one has put together enough money for the down payment on their first home than children are suddenly on the way. And as the mortgage looms on the horizon along with other potentially monstrous expenses such as college tuitions, weddings, health care and retirement, the need to protect one’s family often grows with it.

Yet despite this changing (and expensive) landscape, or because of it, many go without adequate protection – often knowingly – and remain uninsured or underinsured. No one is quite sure why, but what is sure is that there’s plenty of opportunity for advisors to monitor changes in their clients’ lives and proactively propose life insurance solutions.

Americans have a “love/hate” relationship with insurance, according to industry research firm LIMRA International (www.limra.com). Many associate such feelings as stress and confusion when asked about coverage needs, yet also express thoughts of responsibility and relief when they see how a policy can protect their families. Further, more than 25 percent of all U.S. households say they are likely to buy life insurance in the next year and 45 percent say they believe that they’re underinsured and expect to buy. Yet in any given year only about one in 10 actually buy life insurance. And the Insurance Information Institute (www.iii.org) says at least 32 million U.S. households admit owning insurance policies that aren’t right for them.

Still others complain about the price despite the fact that the cost of coverage has largely dropped. In a recent report entitled The MetLife Study of the American Dream, it is revealed that 60 percent of working Americans feel they carry more financial burdens than their parents did. Asking someone to take on what may be perceived as an additional expense is always challenging.

Similarly, the State Farm Family Financial Forecast reported in 2005 that financial security is one of the greatest concerns of 86 percent of the families surveyed. An overlapping second goal is to be able to provide long-term financial security for one’s children. Yet 82 percent of those participating admittedly are overwhelmingly underinsured. And then there’s the business of discussing your client’s mortality – rarely a pleasant topic.

Other evidence is even more overwhelming. Twenty-five percent of household heads surveyed by LIMRA feel they do not have a plan to provide a decent standard of living for their family if they died tomorrow. Twelve percent of households would immediately have trouble meeting everyday living expenses, and another 15 percent would have difficulty keeping up with expenses after several months.

Ease into life insurance

Because individuals acknowledge that they need coverage, yet are reluctant to invest in it, how do you break through these barriers and get the prospect to take a policy or upgrade an existing one?

“The need for insurance arises for many families as a result of an unforeseen accident or emergency,” says Philip G. Palumbo, an advisor with Smith Barney in Garden City, N.Y. “Needs a family may have are the ability to cover mortgage or tuition payments, spouses having enough money to live their retirement comfortably and heirs having enough liquid funds to pay estate taxes and settlement expenses.”

While Palumbo acknowledges it is not comfortable pointing out what could happen to a family should its breadwinner die, it is also irresponsible to avoid the issue from a planning standpoint. When trying to make the prospect see the case for taking that initial policy or upgrading coverage, he urges advisors to understand their client’s “whole financial picture” and ease into the case for life insurance, which has historically been a key component of most long-term financial plans. Other points to note: if the client has an existing policy, are its funding levels adequate? Is the carrier highly rated? Does the client have an estate plan? If so, there’s probably a place in it for a life policy. Also consider what new policies can offer.

Evolving policies

Insurance now often plays a role in trusts, estate planning and overall wealth management. In some cases, it is a key part in tax-reduction strategies. Dual-income households, business partners and those who depend on others use insurance to help secure long-term personal and financial interests. Each of these can be entry points for savvy advisors.

“Younger prospects are often focused on wealth accumulation. Yet a case can be made for insurance as a wealth-protection tool,” says Joseph Ventura, an advisor in Latham, N.Y. “While this is insurance’s traditional purpose, it has changed. Ask clients ‘Are you driving the same car as your parents, watching the same TV?’ There’s no reason they should have the same coverage.”

“Second-to-Die” insurance or survivorship life is typical of the new policies that have evolved to meet changing lifestyles. Second-to-Die is commonly acquired in the names of both spouses because the benefit is often used to pay estate taxes. Because the policy is based on the “joint life” expectancy of both spouses, the premiums usually cost less than if separate “cash-value” policies were purchased for each spouse. This is one example in which relatively new forms of insurance are being used as part of an overall wealth-management plan.

“Take the time to understand what is important to your client and their family’s well-being. The best way is to be straightforward and not hold back because you think it may be a delicate subject,” says Palumbo. “Once you do that, you’ll be able to succinctly design a plan that outlines all the potential issues that could come up down the road.”

Garrett Downing, an advisor in Wilmington, N.C., agrees. “Most people don’t know that due to increased life spans and medical advances, rates have dropped and coverage has increased. Just conveying this information can help remove some of the stress associated with worrying about how to pay for a premium. Most clients realize what can happen if they do not have coverage, yet they put off making a decision. They don’t realize insurance is generally more affordable.”

“Just as life has changed for many clients, so has insurance,” says Mark Snyder, an advisor in Medford, N.Y. “Still, a young family needs a lot of protection to maintain its lifestyle in the case of the death of a working spouse, which otherwise could deplete their assets. An older couple may need it to cover estate taxes.”

Look for life-changing events

At reviews, Snyder weighs existing coverage against needs, age and health and marital status to be sure clients are adequately covered. He makes a point of noting any new life-changing events that may alter the need for coverage.

“Buying life insurance can be complicated and time-consuming,” notes Snyder. “If getting information requires too much time and effort on the client’s part, it’s very likely they will continue to put off making a decision or decide it’s not worth their time and trouble. Part of the advisor’s job is to make the policy clear. Clients don’t examine insurance policies every day. Make the benefits and costs easy to understand and use relevant examples.”

It’s not only the working class who stall when it comes to being adequately covered. According to a Hartford Financial Services Group survey, over 38 percent of the emerging affluent did not review their life insurance coverage after a major life event, such as the birth or adoption of a child, marriage or divorce, the purchase of a house or primary residence or the completion of a child’s education. Sixty-seven percent said they did not review their coverage annually and 6.8 percent reported never reviewing their coverage.

“Many realize the need for insurance but regularly put it off,” says Downing. “Once children come into the picture, however, the case for coverage becomes very clear.” If Downing’s client or prospect already has an existing policy, he’ll offer to review it. “Very often we come back with a new policy that offers greater coverage at a better rate.”

Downing does not have a regular review schedule but estimates that it’s common for clients to go 10 years without reviewing their coverage. “A lot happens over time. Children are born. Homes are purchased. Retirement gets closer. Each of these impacts a person’s insurance needs.”

Emotional issue

“Many clients approach life insurance with the same mentality as property-and-casualty coverage,” says Snyder. “They know they have to insure their home and car and that’s a commodity-type sale. Life insurance is a different case. You do not have to buy it, plus, there can be emotions involved.”

Wrangling with emotions need not be complicated. Three key emotions in life insurance purchasing decisions are regret, fear and love, according to LIMRA. “Remain professional but ask clients how they’d feel if they were to prematurely die and had young dependents,” says Ventura. “How would they feel if they were diagnosed with a terminal illness? Conversations like these can arouse strong feelings but cross the minds of everyone. Maintain a positive and professional demeanor through fact-finding, analysis and relationship-building. This will lead to a case for coverage.”

“Recommendations should only be made after meticulous consideration of a client’s long-term needs and goals,” says Palumbo. “In the end, if you get clients to make the proper decision, it will benefit their families and create peace of mind.”