It’s a common refrain heard by many financial professionals from their clients: Do I really need a life insurance policy?
Even though it isn’t always a comfortable topic, your clients are looking to you to protect their futures. For that reason, your answer should be pretty straightforward: As soon as your clients have beneficiaries who depend on them financially, setting up a life insurance policy is a must.
There are a handful of ways you can encourage your clients to take out a policy. Above all, providing easy-to-understand, transparent information will simplify the process and turn more of your shoppers into buyers. Below are some key tips that will make the decision much easier for your clients.
Provide applicable, clear information
LIMRA's 2020 Facts About Life research found that 16% of American consumers say they need life insurance coverage but don't have it. Additionally, LIMRA's 2020 Insurance Barometer Study shows more than half of Americans estimate the cost of a term life insurance policy at more than three times the actual cost. Younger Americans are likely to estimate the cost to be as much as five times the actual cost.
This is where providing clear information and educating your clients can go a long way in helping them actually select a policy. Treat all discussion of the life insurance policy as an educational process, one that will help your clients grasp exactly what it is they’re purchasing and why they need it.
For example, you might want to start with the absolute basics, such as the different kinds of life insurance (a term policy or a permanent policy) and then explain their features as well as the pros/cons in easy-to-understand terms.
Help clients define the right amount of coverage
A top question that many clients have is: How much coverage do I need?
It’s not always an easy question to answer, but giving your clients a sound estimate will be crucial in getting them to take action.
Many financial professionals have a basic rule of thumb: Recommend a policy that is 20 times your client’s income. So, for instance, if your client makes $50,000, you might suggest taking out a $1 million policy if it is within his or her budget.
In order to determine their needs, however, you need clients to be completely upfront about the importance of their income to the their beneficiaries’ lives as well as any outstanding debt (mortgage and credit cards, for instance) that would need to be paid if your client died and that income stream stopped.
Offer a policy within their budget
Unfortunately, many Americans believe life insurance is too expensive and that they can’t afford it on top of their other financial priorities, such as saving for retirement or paying down debt. By demonstrating that there is a policy suited for an individual’s specific budget, your clients will feel more comfortable taking out a policy.
Give your clients options that fit within a range of what they would like to pay (term insurance, for example, is generally cheaper than a whole life policy) and remember, different payment modes (i.e., semi-annual, quarterly, monthly) can be illustrated to help with sticker shock. Don’t forget to remind clients that there is no cost to apply for the policy and that staying healthy might help lower rates.
Reiterate their privacy
Research from LIMRA shows that one of the barriers to getting clients to elect a life insurance policy is that they don’t want to take a physical exam and would rather submit information instead. But there’s good news here: You can help them understand the benefits of an in-person exam, and how they can improve the chances of accurate test results. You can also give them tips to help ensure it’s a smooth process.Remind them that you’re there to help
While more Americans, especially millennials, are using the internet to buy life insurance or do basic research, many clients still want to be able to talk honestly with a financial professional who they trust.
Leave plenty of time to answer your clients’ concerns, reiterate the importance of having a life insurance policy and — once they elect a policy — don’t forget to revisit it every year and adjust it as needed.
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