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.