People tend to think about life insurance in simple terms — you buy it because, well, you are going to die one day, and just in case that day comes sooner than you’d like, you should be prepared. As a result, clients often relate life insurance to a death benefit, but as we in the industry know, it can be much more.
In recent years, there has been a lot of innovation and change in the life insurance industry. Today, life insurance can do more than ever to help preserve the lifestyles of both policyholders and beneficiaries, with death benefit and living benefit options that can address a variety of financial needs, including:
- Income replacement
- Paying college tuition
- Providing tax-advantaged retirement income
- Offering financial protection in the case of a disability or critical illness
- Diversifying investment portfolios
- Transferring wealth efficiently, and in a way that is tax-advantaged
- Planning for business continuation
The flexibility of many life insurance products — coupled with the financial security they can provide — may contribute to a feeling of empowerment among life insurance policyholders. As an example, Lincoln Financial Group’s recent “Measuring Optimism, Outlook and Direction (M.O.O.D.) of America” study finds that 68 percent of life insurance owners feel somewhat or very prepared for retirement, compared to only 44 percent of those who do not own life insurance.
But the confidence and sense of empowerment offered by life insurance does not have to be limited to financials. Life Insurance has the potential to influence those same types of sentiments in everyday life. The M.O.O.D. results show that 71 percent of life insurance owners believe they’re “in control” of not only their financial future, but also their personal/family life and their health. This is compared to 64 percent of non-life insurance owners who feel “in control”.
See also: Life insurance by the numbers
Traditionally, life insurance is viewed as a necessary precaution, but one that is unrelated to day-to-day life. Yet, these M.O.O.D. results suggest a much more compelling truth: owning life insurance can contribute to a more holistic “take charge” attitude — one that also includes everyday activities and priorities such as exercising or spending time with family. So why is this important to financial professionals? Because financial and retirement planning is at its best when it is rooted in optimism and empowerment that leads to action — action that ensures people set-out with and maintain a plan that reflects their financial objectives, circumstances and stage of life.
As we wind down Life Insurance Awareness Month, it’s important that we carry the spirit forward in a continuous effort to put the “life” back in “life insurance”. By demonstrating the utility of life insurance policies, educating about the different types of life insurance, and dispelling many of the misperceptions about life insurance, we as an industry have an opportunity to help consumers understand the role that life insurance can play in alleviating financial concerns, so that they can focus on the making the most of their everyday lives. And that is, perhaps, the most valuable “living benefit” of all.
For more on Life Insurance Awareness Month, see: