There are so many different options when it comes to insurance, and the stage of life that your clients are in will most certainly determine the types of conversations that you will want to engage in with them. Generally speaking, there are two types of insurance conversations that you will have with your client.
The first conversation will typically take place when your client is in their younger years and revolves around their need for income replacement. Your client’s insurance needs involve a somewhat simple snapshot of current possible risks to their loved ones’ financial situation today. The main focus of this conversation is to illustrate how insurance can help your client’s family maintain the same standard of living in the event of an unexpected occurrence.
That second conversation tends to occur when your client is a little older, a little more financially stable and it’s all about asset protection. In fact, your client will have less of an actual need for something and more of a desire to build wealth and facilitate their estate and tax planning.
But what if you could offer your client both in a single policy – the income protection they need today and the chance to build their assets for the future? We’re constantly encouraged to live in the now, which is great. But when it comes to insurance planning, is “now” the best viewpoint for your client? Term insurance, although a solid option, tends to be short sighted and does not take your client’s long-term needs – their assets, tax and estate planning – into account. As an Advisor, your role is to help them see the big picture, not just the short-term solution with an option to convert to a permanent solution at a later time and at a higher cost.
So, what questions should you consider in order to identify your client’s long-term needs?
- Does this plan serve my clients now and in the future?
- Will this client have any assets in the future that will become a tax liability?
- Does this plan deal with both income protection for today and asset building for the future?
- Does this plan provide equity inside the plan for flexibility or an emergency?
We’re here to help! There are presentations inside PPI’s Toolkit (Advisor login required) that can demonstrate the true value of combining permanent and term insurance together as a solution. This plan can grow with your client as they move through the different stages of their life and is especially beneficial in the asset accumulation phase, as it does three things:
- Provides short term protection for a large temporary need
- Locks in cost of insurance rates for long term protection when your client is younger/healthier
- Allows equity to build over time, inside the plan, for flexibility
There is no doubt that your client’s needs will change over time and something to keep in mind is that once they no longer need that large temporary coverage, your client can surrender that coverage and continue to focus on growing their permanent death benefit.
Yes, at times it may feel overwhelming, even paralyzing to find the perfect plan for your client. With so many insurance options available, what is the ‘right’ solution? The reality is there is no perfect plan, but there are plans that can offer your client the coverage they need now and later, as they grow. The most important thing you can do for your client is to have a conversation about their true needs today and tomorrow, and then offer a plan that can shift and mould to your client’s needs over time.
For a similar article about choosing a comprehensive insurance plan for your client, please see Term Insurance – What Your Client Should Consider for Renewal.
If you have any questions about the varying insurance options available, please contact your local PPI office.