What You Need to Know
- COVID-19 has helped spark interest.
- Too many consumers still think their employers’ group term life policy is enough.
- Too few understand that a life insurance can help them build wealth, as well as providing protection.
The increase in the number of Americans that are choosing to get life insurance following the COVID-19 outbreak continues to grow. In fact, one in four people surveyed by Life Happens said that they decided to apply for life insurance because of coronavirus.
Fast forward to June 2021: LIMRA reported that life insurance sales “rose 11% in the first quarter of 2021, compared to the same period in 2020, and new premium growth also saw a double-digit boost, up 15% from a year ago.”
The organic growth of policy count this year is — unsurprisingly — driven by COVID-19. People want to protect themselves and their families in this very uncertain time.
But did your clients know that life insurance provides more than just a death benefit?
You need to make sure your clients understand that a life insurance policy can also serve as a means for building personal wealth.
This is the mindset that my company and I have been campaigning for for the longest time. We do this not because we want people to come to us to take care of their policies, but because time and again, we’ve seen how countless individuals have missed out on so much in life because of their misconceptions about life insurance.
How do we do this? Through activities that educate people about what life insurance really is all about.
Here are four things I tell my clients.
1. In order to get the most out of your life insurance, you need to make sure you are creating a healthy policy.
The key components of policy health are: face-amount, the life insurance type, designation of beneficiaries, and an annual insurance review.
Obviously, the face-amount is the amount of the policy. Anyone trying to get a policy must identify what the appropriate amount of their insurance is, which is typically somewhere around five to seven times their annual salary.
I also make a point of telling clients that the appropriate face amount can also be determined by using the “DIME method,” or a method for determining an ideal face amount based on Debt, Income Replacement, Mortgage and Education for any dependents that may rely on the insured’s income.
Clients also need to know that the beneficiary of a policy can be a person, trust or nonprofit, and that there can be more than one beneficiary.