When discussing life insurance options with clients, there are only two things your client needs in order to have a well-rounded protection plan in place: Enough insurance and it should be active the day they die.
The first thing you need to determine when working with a client is how much insurance they need, and how long it will provide benefits to the surviving spouse.
One of the biggest mistakes people make when buying life insurance is only thinking of paying off the house and paying for the funeral.
Once the family breadwinner has passed, their spouse and family will not only be left without income, but a potentially large stack of bills. Many people only think about covering the funeral and burial costs, and paying off the mortgage. But, they need to look further into the future. The children may need to go to college and that lost income must be replaced to help keep the family afloat for months – possibly even years – to come, until they can start to replace that income on their own. It is even recommended that individuals purchase enough life insurance so that they will receive the same amount of their deceased spouse’s income for at least five years.
LifeHealthPro.com revealed that there are also many personal uses for life insurance like:
- 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 or an annuity for a charity, church, foundation or nonprofit.
- 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 the child will be guaranteed insurable for future life insurance coverage.
Remember to always consider things beyond an individual’s immediate needs and begin examining what the landscape may look like down the road. Our clients need to be protected no matter what happens, and look to their National Agents Alliance representative to provide them with the information and recommendations to make the best decision.