Although the life insurance decision is based on many risk factors, one of the most important ones you’ll want to consider when going over the options with your client is the client’s age. Earlier in life, there is a longer time horizon for coverage, and therefore the same product wouldn’t suit their needs as well as someone who is older.

Early in life

Whole life products offer guarantees on the premium, death benefit, and cash value. Dividends can accumulate into significant cash values over a long period of time. And the companies that manufacture this product are historically strong.

It makes sense to use this whole life as the basis for the conservative portion of your client’s financial portfolio.

People in their twenties or thirties frequently purchase whole life because they anticipate having a long period of time in which to accumulate cash values. Also, the lifetime guarantees are especially attractive at a young age.

Late in life

However, it is often the case that additional life insurance is needed later in life – for example, to cover a second mortgage, a business loan, or college funding for children and grandchildren. Or, perhaps, maybe your client didn’t get coverage when they were younger, and are looking for their very first policy at an older age.

What is the product of choice at that point?

At a later age, the shortened time horizon may make whole life less attractive, because there is less time to accumulate a cash value. By the same token, the shortened time horizon translates into larger premiums because the insured has less time in which to pay for the same death benefit.

Perhaps more importantly, an emergent risk factor may eliminate whole life from the product selection altogether. For example, the insured may have developed diabetes, hepatitis, or another serious illness. Maybe he has taken on a dangerous hobby, such as scuba diving or mountain climbing. Or career advancement may require travel to remote world-wide locations.

These factors probably give term insurance and universal life insurance an edge over whole life in pricing.

Whether your client is older or younger, you can find a policy that is a good fit for them, as long as you do your due diligence and ask all the fact finding questions.

Steven H. Kobrin is an independent life insurance broker and nationally recognized expert in field underwriting for people considered high risk. He can be reached at (866) 633-1818 or skobrin@stevenkobrin.com.