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March 10, 2010 at 07:00 PM
With clients still skittish from the effects of the market downturn, many independent agents may be wondering where and how to continue generating new life sales.
Term life insurance can be an attractive choice given its relatively low cost and simple-to-understand structure. Finding and targeting the right clients, however, is the key challenge.
As you scout for new term life insurance prospects, keep in mind these three distinct groups. First, talk to clients who are worried about “throwing away” their premium dollars on a product they may never use. Second, look for clients who are refinancing their mortgage or purchasing a home. Finally, seek out those whose jobs or benefits packages no longer are available due to recent workplace layoffs or expense cut-backs.
Clients worried about ‘throwing away’ their hard-earned money
Whole life policies have been gaining traction in recent months due to the basic assumption that they represent a good, stable, long-term investment. Oftentimes, however, the potential for cash value build-up in these policies over time can come with a great deal of product complexity and a hefty price tag.
There is a solution for clients seeking the protection of life insurance at a cost-effective price, but don’t want to lose the money they put into the policy because they outlive the 20- or 30-year term.
A term life insurance policy with a return of premium option may be the answer. This type of policy includes the sought-after death benefit, but with more competitively priced premium rates and far less complex policy details than an equivalent whole life policy.
Term with return of premium allows policy owners to recover their base policy premiums income tax-free if they don’t use their policy’s death benefit throughout the term.
Clients refinancing their mortgage or buying a home
While the housing market has suffered tremendous losses since 2008, low interest rates have led to a rise in home loan activity. In fact, low interest rates have prompted approximately $1.1 trillion in refinancing activity in 2009, according to Freddie Mac.
Bargain prices also are bringing buyers back into the housing market. The median existing home price decreased 15% from December 2008 to December 2009, but the number of homes sold rose 6.5% year over year, according to the National Association of Realtors.
