From a logical standpoint, life insurance is one of the best purchases a person can make—it provides financial security for loved ones left behind in the absence of a deceased family member.
This, in turn, provides emotional peace of mind knowing that in the case of the unthinkable, loved ones will be taken care of.
However, many people still deny themselves and their family this security by forgoing a life insurance policy.
Why?
People are uncomfortable (perhaps even afraid of) contemplating their own mortality.
(A host of other reasons also keep people from purchasing life insurance. Read more here.)
Life insurance can be an essential tool in covering end-of-life expenses, yet that’s only a minor part of its benefits, especially if you have a policy that covers lost wages for a deceased wage-earner.
But according to a recent LIMRA study (http://dbhc.com/wp-content/uploads/2017/01/2016-Insurance-Barometer.pdf) the most common reason people get life insurance is to cover the costs associated with a funeral and burial.
Why?
Because this is a concrete inevitability. A funeral and its costs are a guarantee with death—therefore, it's easier to visualize and use as a rationalization to purchase life insurance.
A higher net worth individual, one who would be able to cover funeral costs out of pocket, may not put a lot of weight into these end-of-life expenses.
There are other factors that drive these consumers to purchase life insurance (for example, in order to leave an inheritance to their children).
What keeps a person from buying life insurance?
Your high net worth clients and prospects may consider these benefits and still stay away from life insurance because of the relatively low yields compared to other potential investments.
A high net worth individual has likely amassed their wealth by way of shrewd investing.
Life insurance may seem like an inefficient investment to high net worth individuals.
Another common reason people don’t invest in life insurance is because they have other financial priorities that require their assets.
The takeaway
Insurance agents likely need to spend time educating your clients about the benefits of life insurance products while simultaneously offering solutions that allow your clients to retain financial liquidity.
Premium financing
Let your high net worth clients know about premium financing, which allows them to receive a loan that pays the premiums of the life insurance policy.
The client is then responsible for the interest of that loan out of pocket, but this kind of plan allows them to get their life insurance policy without a substantial impact on their liquid capital.
Premium financing is especially valuable for clients who want to keep their freedom to continue investing in other asset classes.
Premium financing plans aren't for every consumer, and some may not even qualify for the loan needed, but the knowledge of this kind of tool's existence is powerful when trying to overcome client apprehensions about life insurance.
About Larson Educational Services:
Utilizing 40 years of real estate training and professional education experience, Florida real estate school Larson Educational Services is the premier provider of Florida real estate licensing, exam preparation, post-licensing, CAM licensing, mortgage loan originator licensing, and continuing education in Southwest Florida. Classes are available in Fort Myers, Naples, Sarasota, and online. We are an approved Florida Real Estate School (License #ZH1002299), Florida CAM School (License #PRE31), Florida Insurance School (License # 370501) and NMLS Approved Course Provider.
Brad Larson
Larson Educational Services
1400 Colonial Blvd. #44
Fort Myers, Florida
33907
239-344-7510
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