Life insurance continues to be a high-demand benefit, appealing to workers who want to protect their families’ lifestyles if the worst should happen.

But matters of life and death can be complex. With so many options to choose from and jargon to decipher, life insurance can seem too complicated (or expensive) for many individuals. With the health care overhaul in full swing, now is the time for agents to embrace new market opportunities and put their sales and prospecting efforts into overdrive. With its low barrier to entry and particular appeal to the younger generation, term life insurance is a desirable entrée for those seeking a measure of stability their loved ones can count on.

Coming to terms with term life

When deciding between term life and whole life insurance policies, the best plan for any particular individual depends on their situation and what they want from their policy. Helping clients make some basic decisions about their top priorities can quickly clarify which plan is best for them.

We all know term life is the less expensive and simpler form of insurance. It provides coverage for a specified time period — most often 10, 20 or 30 years — and is designed for temporary circumstances. At the time of application, the insured applies for a specific amount of coverage and selects the term option.

Coverage amounts can range anywhere from $10,000 to half a million dollars. Another attractive feature associated with term life insurance is a guaranteed-issue option, which is appealing to many clients because they don’t require any underwriting.

Term coverage is often purchased by those with young children or children enrolled in college, or are carrying a large debt load. Remind your clients that it is better to buy now rather than later. The younger and healthier an individual is, the lower their premiums will be, and more flexibility and options will be available to them.

If the insured dies during the term, the insurance company pays the face amount of the policy to the beneficiary. Unlike whole life insurance, term life insurance does not build cash value. When the specified term of the policy ends, the policy expires. However, at the end of the term, the policy may offer the option of renewing the policy or converting to a whole life plan.

The premium for a term life insurance policy is guaranteed for the selected term, so you know how much the coverage will cost from month to month and year to year.

Benefits can be used to pay immediate needs such as funeral expenses, medical costs, and current bills and debts. They can also be used to pay future needs, including ongoing financial obligations, education costs and retirement expenses.

The X factor

The challenges facing the agent community are well known. Protecting your own income has become a pressing issue as commissions are being cut more every day. Identifying attractive prospect pools may help with this issue. Generation X is still 34 million strong and commands a healthy annual buying power, and life insurance has emerged as a growing need among these consumers. Gen X workers, alongside their older Baby Boomer cohorts, have been the most scarred by the 2008 recession. This group has the highest unemployment rates, and is one of the most stressed of the generations, according to the 2013 Aflac WorkForces Report. A large number of Generation X families also now have children of their own and many rely on dual incomes to meet daily needs. This makes them particularly vulnerable in the event one spouse dies prematurely from an illness or accident.

Members of Gen X were the first latchkey children, making them highly responsible as a whole. Most place a high degree of importance on protecting their standard of living and that of their spouse. Yet, more than one-third (34 percent) of Gen Xers have less than $500 right now to pay for out-of-pocket expenses associated with an unexpected illness or accident, making the possibility of bankruptcy if one spouse dies very real if life insurance is not owned. This visual from New York Life Insurance Company gives a clearer picture. 

Source: New York Life

As employers begin to adapt to new health care mandates and an economic recovery, many are decreasing life insurance policies or removing them entirely. These changes can leave Gen X workers with gaps in coverage often unbeknown to them. It is not uncommon for workers to believe their employer has provided them life insurance coverage, when they really have not. Alternatively, if their employer has provided some level of coverage, it is typically not enough to protect their standard of living.

These reasons contribute to the growth in popularity of voluntary life insurance products among employers and their employees. And, over the past several years, products have become much more attractive. Voluntary policies are budget-friendly and portable, even if policyholders change jobs or retire — a feature many Gen X workers appreciate.

Opportunity strategy

It is incumbent upon you as an insurance producer to do all you can to protect an individual or group of individuals’ way of life, secure their future and provide them with the proper life insurance protection that will see them through rough times. Term life insurance offers the financial stability policyholders and their loved ones can count on.

Enacting this protection requires you to educate your clients about the options available. Many consumers purchase life, homeowner and car insurance, but they don’t completely understand the policies’ purpose. This is especially true when it comes to life insurance. Many think it is simply to protect their mortgage, car loan and any current debt, but it is first and foremost used to protect the income their families were anticipating from them.

When consumers don’t understand the value of life insurance, they don’t fully grasp their life insurance needs. And contrary to consumer perception, their life insurance need does not necessarily diminish as they get older. Help your clients understand what a term life policy entails, but reinforce that their needs must be reviewed regularly to make sure their families remain well-protected.

Keep the conversations simple and straightforward. While your clients may be inclined to question the amount of a life insurance premium, try to demonstrate that for as little as $20 to $30 a month, they can provide security for their family. If the discussion about term is any more complex, it only presents more reasons for a client to delay his or her commitment.

Now more than ever, producers can benefit from an opportunity strategy that guides their focus to the right places. The formula for success in marketing to younger segments like Gen X or Y, for example, is different from that of the now-aging Baby Boomers. For younger consumers, taking time to meet with a life insurance agent, filling out a multi-page application, answering medical questions and scheduling a physical exam are not options.

These are primarily online buyers who want their transactions completed quickly. The insurance producers who have figured this out and are getting term life online marketing right with simplified products—some of which include coverage pushing $1 million for those willing to pay extra when bypassing a medical exam.

Successful producers know from experience that there is no single, easy way to close a life insurance sale. It takes time and persistent effort. These are the producers who also know that the rewards are more than worth it. 

A Widening Gap for Gen Xers

Median Amount of Life Insurance Coverage in Place

Amount Needed to Cover Self-Reported Needs

Coverage Gap

$260,000

$708,996

$448,996

$400,000

$762,688

$362,688

Graphic credit: New York Life Insurance Company.