Consumers need stability in their investments more than ever due to the disruptive markets. Unfortunately, a study by Saybrus Partners, Inc. shows that only 49 percent of adults who have a financial advisor have discussed the idea of adding life insurance to their overall plan. That’s a startling number, particularly in relation to market volatility.
“We believe life insurance is foundational for a well-designed financial plan, not only for the protection it provides but also its tax efficiency, and potential for cash accumulation and wealth transfer,” said Kevin Kimbrough, national sales manager for Saybrus Partners. “The survey affirmed statistically what we have heard anecdotally for years-financial advisors often do not discuss life insurance during the financial planning process. They are missing an opportunity to fill a critical gap in some existing financial plans while at the same time differentiating themselves and expanding their practices.”
Some other notable findings include:
- Nearly half (47 percent) of U.S. adults who have a financial advisor and have life insurance said their advisors have never reviewed their existing life insurance policy with them.
- Among those who have discussed life insurance with their advisors, 15 percent said the conversation took place more than 10 years ago, while 40 percent have discussed it within the past year.
- Eighty-three percent said they would be interested in life insurance policies that carried additional features not present in their current policy.
- One-third (34 percent) of U.S. adults who have a financial advisor and a financial plan said that over the past two years, their advisor has recommended that they add some form of insurance to their financial plan. However, less than one quarter (24 percent) were advised to include life insurance specifically. Only 10 percent said their advisor had recommended long-term care insurance.
- The most fundamental role of life insurance is to protect families/heirs with a death benefit, and 81 percent of U.S. adults who have a financial advisor and have life insurance said a primary reason they carried such policies was to protect their family and/or heirs. Only 17 percent cited wealth transfer as a primary reason they had life insurance and 15 percent noted the potential for cash accumulation, which is a key feature of many permanent life insurance policies.
“These statistics demonstrate that typical life insurance policyholders may not be aware of the many other uses for life insurance beyond family and heir protection,” Kimbrough said. “They may be relying on IRAs or annuities for wealth transfer, which are designed for asset accumulation and retirement income but not for wealth transfer, especially from a tax perspective.”