Term life insurance is often viewed by purchasers purely from a price perspective: how low can you go?
Agents and clients alike seem to see term insurance mainly as a way to provide temporary protection with low premiums for a given face value. However, a term life policy packaged with one or more accelerated benefit riders can help provide clients not only with a death benefit but also with financial assistance if the insured has a qualifying illness or condition. Depending on the issuing insurance company, such illnesses or conditions may include critical, chronic or terminal illness or cognitive impairment.
Term life products with accelerated benefit riders are not “one size fits all,” though. Nuances in structure and features abound, enabling brokers to help clients differentiate among the myriad offerings in the traditionally commoditized market for term sales.
Possessing insight on the key distinguishers among these riders can support your bottom-line business goals. As LIMRA President and CEO Bob Kerzner reported in an industry briefing on May 14, term premium and policy count were up two percent in the first quarter of 2013 — and more than one-third of the term riders reported positive growth. “Our researchers believe we should see steady growth in term as employment figures improve,” Kerzner added. That certainly seems to bode well for agents considering the sale of term policies that include accelerated benefits.
The prospect of a continued increase in the sales of term policies and riders is also good news for existing and potential clients, given the valuable role living benefits can serve. Unexpected medical setbacks can happen any time, even to younger clients, and can have a significant impact on a family’s financial stability. In fact, according to one study, more than 60 percent of personal bankruptcies are medically related — and that number includes people with health insurance.
An ideal product for the middle market
Millions of Americans, therefore, are potential candidates for the type of protection provided by a term policy coupled with a well-structured accelerated death benefit rider. However, such protection can be especially attractive for middle-market consumers who have a real life insurance need and also may find themselves with limited resources in the event of a qualifying critical, chronic, or terminal illness or condition.
In today’s economic climate, these consumers are especially conscious of the need for their dollars to work hard — a fact you can leverage to help clients understand the value of a term policy with living benefits.
People interested in term products typically buy them based on price and get a policy that pays out only if they die. With appropriate riders, they can opt for a life insurance product they don’t have to die to use. An accelerated benefit rider may provide for a benefit if they have a serious, qualifying illness or condition. Applicable qualifying conditions vary, but many illnesses that strike people today, such as invasive cancer, a major heart attack, or a stroke are frequently included.
Further, a term policy with a living benefit rider can help mitigate the need for a plethora of other products that may be unaffordable for a particular insured person, such as disability insurance, critical illness coverage and long-term care insurance. By helping to cover multiple needs, it can help families provide for their financial futures in an affordable way.
What’s more, it’s possible for clients to easily grasp the merits of a term policy with living benefits, since they probably (like most of us) know someone who has suffered a potentially life-changing illness. That friend, colleague or family member may have survived the condition but suffered a significant financial toll, causing undesirable changes in lifestyle. Further, with the uncertainty that still surrounds implementation of the Affordable Care Act, some people are worried they won’t be able to afford quality medical care even if they have private health insurance.