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Helping Clients Recognize the Need for Life Insurance

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How many people have sought you out to buy life insurance so that they can cross it off their to-do list? The likely answer is, “none.”

Buying life insurance won’t be found on anybody’s priority list because it’s just not something that people think about on a daily basis. The old saying that life insurance is sold, not bought, fits nicely here. John Beck wrote a great book earlier this decade called “The Attention Economy,” which framed just how difficult it is to grab a consumer’s attention.

One point Beck made was that the average American grocery store stocks more than 140,000 items, yet the average family purchases only about 150.

There is an abundance of financial news and information, educating the masses more than ever before. But this blessing is also a curse. Buying the right box of cereal doesn’t quite carry the same challenge as buying the right life insurance coverage. Imagine consumers wading through the ocean of information that’s available on products and services, doing their homework trying to make an educated decision, and approaching you to have “the life insurance discussion.” It won’t happen that way. But that discussion does have to happen, and in order for it to work, we need to make life insurance a priority for our clients.

Whatever your particular approach, by making it happen, you’ll help them accomplish the most important “to-do” that never even made it on their list.

Recognizing the need
Every person, young or old, has different values when it comes to family life. For some, there is nothing more important. For others, it’s less of a priority. But for those who place their family above all else, it will be especially effective to remind them of how important their week-to-week paycheck is. In the event of their death, surviving family members must be able to sustain some type of similar lifestyle. As painful as it can be to discuss this, when going over various scenarios, remind them that their children will have already lost a parent.

They don’t want to lose another parent to a job just to make ends meet. Having the money from an insurance policy buys them peace of mind and security in a very uncertain and emotional time.

As a financial professional, it’s crucial to find out what is most important to the family and then have them decide if that’s worth protecting. In other words, you must appeal to your client’s emotions and justify the sale with logic.

Most sales people sell with their left brain, which is logical, rational, and analytical. You should instead sell with your right brain, which controls emotions and intuition.

Ask any top producer, and they’ll tell you that they sell concepts, emotions, pictures, and feelings. They paint the full picture and let their clients see how the drama could possibly play out. Because let’s face it — in our world, we’re trained to see logic, numbers, and the support of data. People don’t buy data, however. They buy what makes them feel good.

Life insurance as a key element of financial planning
When thinking about their financial futures, many people focus solely on their investment strategy. Their most pressing concerns are reaching their financial goals for retirement, paying for their children’s college education, and other long-term needs.

Life insurance is considered a cornerstone of financial planning because investment plans usually assume that the client will live to their life expectancy and generate income until retirement. But how do you get your clients to overcome their planning inertia and recognize the need for life insurance?

Try asking some simple questions to which clients too often have no answer. For example:

  • What happens if there is no income because of the death of a breadwinner?
  • How will your children fund their college education?
  • How will you live in retirement without your spouse?
  • What happens to the assets you’ve accumulated if there is no insurance to cover everyday expenses?

Once you uncover the truth, you must show your clients how life insurance can be an important addition to any financial plan, designed to help their family meet current or future needs. Life insurance can help cover immediate expenses and can provide long-term protection of the assets they’ve earmarked for their family’s future.

Let’s face it — no one likes to talk about their own demise. The mortality tables can further spur your client’s reluctance to even think about purchasing life insurance. It’s hard to lay out a person’s life expectancy on paper, but it’s a necessary step in helping people recognize the need for coverage.

Too often, clients don’t even realize what life insurance can be used for. That’s when it’s important to educate your client. Insurance can help pay for final expenses, such as unpaid medical bills, funeral expenses, and estate settlement costs, and it can also provide the money to help meet the ongoing costs of running a household — without dipping into savings and depleting assets needed for the future.

You’ll also want to explain that the death benefit proceeds from a properly structured life insurance policy are generally free from federal income taxes and can help put your client’s children through college and continue building a retirement nest egg for loved ones.

Make sure that your clients understand which vehicles will help them reach their goals, whether those goals include retirement income or just gifts to pass on to heirs. Keep your clients aware that there are many options out there, and they should almost never keep all of their savings in one location.

From an ethical standpoint, you should be educating clients on what works best for them. Both the industry and the high commissions paid to agents are always under scrutiny, but essentially, doing the right thing for the client every time will always keep them happy.

More importantly, educating them about the importance of what you are doing for them will keep them coming back to you for more information and help you develop the relationship you desire.

Craig Silverman offers securities and investment advisory services through AXA Advisors. He can be reached at 631-385-5234.