Helping prospects ‘buy’ life insurance: A primer for newbies
There are many ways to help prospects buy life insurance. However there are really only two things that matter in order to have a successful life insurance program. Your prospects should have enough of it, and it should be in force the day they die.
So the most important questions to ask are: How much and how long?
Do they want to protect their loved ones if/when something happens to them, or are they concerned about covering the cost of a funeral and paying off the house? Maybe their main concern is about the kids going to college, but that is all.
All these reasons to have life insurance are important; even noble. The question is are they protecting their family members enough? After all these important aspects of daily living have been considered, then what? Have they considered the lifestyle their family has been living, the impact their death will have on this lifestyle, have they thought about income?
If a husband is making $80,000 a year, they also account of the loss of his income. They may have thought of the house being paid off and the cost of the funeral being taken care of, but is that where the survivor’s problems will end? The answer may well be “NO!”
His wife will now be without her husband’s income… forever. The family has likely grown accustomed to their lifestyle lovingly provided by his income and now the income is gone. Even if she is working also, how the family’s lifestyle will manage from a two-income family to a single-income family is a question that should be asked by a life insurance producer.
Once that answer has been provided, another question is how many years of lost income does she need until she either replaces his income or doesn’t need as much. The house is paid off now, but that only takes away the house payment – nothing else. The rest of the bills still come in each month.
Again, the problem is that a lot of salespeople and prospects are only thinking about paying off the house and paying for the funeral.This is a huge mistake.
Talk to your prospect about insuring their current income. For example, include 5 years of income at the time of the purchase into the policy. You want to make sure the spouse would at least have the same thing coming in for 5 years after the husband or wife is gone and have the home paid off, the funeral taken care of, and ideally also some college money for the kids.
There are many other uses for life insurance. Some of the personal uses of life insurance are:
• Burial expenses: Life insurance will pay for funeral expenses and benefits can be assigned directly to the funeral home.
• Mortgage and debt protection: Life insurance can pay off a mortgage, credit cards, a student loan and other personal debt.
• Education: The cash value in a life insurance policy can provide funds for a college education.
• Charitable giving: Life insurance can fund a donation to, or an annuity for a charity, church, foundation or nonprofit organization.
• Estate creation: Buying a whole life insurance policy gives the insured an instant estate and makes him worth a lot more money.
• Estate taxes: Life insurance can be used to pay estate taxes when taxes are due.
• Inheritance equalization: If the son inherits the family’s $2 million mansion, what does the daughter get of equal value? How about a $2 million death benefit from a life insurance policy? This gives both children an equal inheritance.
• Survivor income: Life insurance can provide a lifetime income to a widow or widower when the spouse dies. It’s instant security.
• Children’s insurance: Life insurance on a child not only guarantees a death benefit; it also ensures that the child will be guaranteed insurable for future life insurance coverage.
Life insurance is certainly not a cure-all for individual financial risk. Take another look and realize that just because insurance can be the answer to a problem, it doesn’t mean it’s always the best answer. It can be the right answer for the right risk. Because when your prospect takes the risk of going without life insurance… and loses… it’s the loved ones left behind that pay!
Lloyd Lofton, LUTC, of American Eagle Financial Services, LLC, in Marietta, Ga., has 30 years of door-to-door, call center, business-to-business and needs-based selling experience. He is a successful business leader who has led large sales distributions producing $50 million or more a year in sales, who has led recruiting efforts that resulted in hiring more than 2,000 sales professionals in one year and who has trained hundreds of managers, from field sales leaders to executive level leaders. You can learn more from his web site: lloydlofton.com or email at [email protected]
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