Navigating life insurance options can quickly become complex. There are several policy options with different requirements for applications, as well as premium amounts and associated benefits. By the time a client has scheduled a meeting with you, they might be overwhelmed. So, as a life insurance professional, you need to be prepared for any life insurance questions that come your way. Doing so can help you build trust and calm any worries or fears your clients might be experiencing.
Thinking about the future can be daunting, and it might be a difficult conversation to have with clients. However, life insurance provides financial security, so these discussions are important to have ahead of time.
In these meetings, your clients will likely have a lot of questions running through their minds. From finances to beneficiaries and coverage amounts, it’s your job to be understanding of their concerns. To do so, provide your clients with the space to voice those concerns. While you can provide them with helpful information, let them communicate what’s on their mind first can help you help them find the right solutions.
When it comes to understanding life insurance, your clients will likely come to you with various levels of knowledge. For someone well versed in life insurance and associated benefits, you might be in a better position to guide them toward a specific policy right away. For someone who is still grasping life insurance concepts, this is a great opportunity to start slow and take an educational approach to your conversations. Afterall, with more knowledge comes more trust and confidence in any plans your client selects for their future.
Remember, clients are coming to you for your professional expertise. They are trusting you with your knowledge to help them make important decisions for their futures. So, life insurance agents need to be prepared for any and all life insurance questions that come their way.
As a life insurance agent, it’s your duty to be prepared for any and all questions that come your way. So, taking some time to review frequently asked questions regarding life insurance can be beneficial. Here are a few questions (along with some answers) to help you when meeting with clients.
To help answer this question, you’ll need to have a conversation with your client about what they envision after their passing. Do they have relatives who can afford burial costs? Do they want to provide an inheritance for a younger generation? Do they want to help someone pay off their debt? If so, life insurance can contribute toward these goals.
Even if your client doesn’t have a certain beneficiary or purpose in mind for their life insurance, you should explain the benefits of having a policy. Regardless of family needs, when someone dies, there are associated expenses. Depending on the funeral or burial plans, this can become quite costly. Life insurance can cover some of these expenses. Additionally, there are several life insurance options available to meet the specific needs of your client.
This question serves as an excellent segue to discuss the different types of life insurance products available. Afterall, understanding each product and their associated benefits can help you and your client settle on the policy that is best fit for them.
When answering this question, make sure you clearly explain the differences between life insurance products. Whole life insurance policies remain intact as long as premiums are being paid, or until the policyholder passes away, at which point their beneficiaries will receive death benefits. This type of policy is also commonly referred to as permanent life insurance and tends to come with higher premiums in comparison to other forms of life insurance.
Term life insurance, on the other hand, is set for a certain period of time, normally, 10, 20, or 30 year periods. If the policyholder passes away before the contract ends, then their beneficiaries will receive death benefits. If the term ends before this happens, then the policy can be renewed.
Once your client understands the basics of life insurance products, you can help them determine which one is right for them. It will come down to how long they need a policy to be in place, how much they can afford for premium payments, and what they would like to use their benefits for.
Different life insurance products have different coverage amounts. So, you’ll need to work closely with your client to help them determine what policy and how much coverage is appropriate.
There are a few different ways to help clients figure out how much coverage they need. A general rule of thumb is to multiply their annual income by 10. They should aim for coverage that is equal to or more than this amount.
Another way to calculate life insurance coverage is the DIME method, which stands for Debt, Income, Mortgage, and Education. Using this method, your client will need to determine the value of their debt, income (multiplied by the number of years they anticipate needing coverage), remaining mortgage payments, and anticipated costs of education for their children. The sum of each of these factors can help determine the appropriate coverage amount.
When discussing life insurance benefits, you might want to break it down into two categories: living benefits and death benefits. Though life insurance is intended to provide financial coverage after the policyholder passes, there are several living benefits that are worth noting.
For one, clients have the option to add riders, which are additional benefits for policies. This might be a long-term care rider, a return of premium rider, or a disability waiver of premium, just to name a few. Another living benefit is the ability to withdraw cash from a whole life insurance policy with cash value. Alternatively, this money could be used to pay premiums.
Death benefits are those provided to beneficiaries after the policyholder passes away. These payouts can be distributed in a single lump sum or through regular installments. How the money is used is entirely up to the beneficiary, but many people use it to cover the cost of final expenses, medical bills, mortgages, or education. Some people even use it to make donations to organizations that are meaningful to them.
Physical exams and medical reviews are used to determine how much of a “risk” a person is in regards to their life insurance policy, which in turn helps life insurance providers calculate premium amounts. This process is known as underwriting. Someone who is healthy (and lives a healthy lifestyle) will likely have low premium payments in comparison to someone who might be living with an illness.
However, physical exams aren’t always required in order to qualify for life insurance. To help speed up the process, your client might be eligible for accelerated underwriting if they are in good health. Instead of a physical evaluation, your client will need to apply for accelerated underwriting and complete a questionnaire about their health and medical history. If approved, and depending on what is found in the analysis, they will be assigned to a classification that helps assign appropriate premium amounts.
If your client’s health has changed, then their premiums could be adjusted. Let’s say, for example, that your client smoked cigarettes when they purchased their term life insurance policy. At that time, their premium was determined by their health and lifestyle choices, and their smoking led to a higher premium. Now, your client has quit smoking and would like to undergo another medical exam at the end of their policy before renewing, which may result in a lower premium since their health has improved. This can also go the other way as well; premiums may increase if your clients health grows worse over time.
Whole life insurance, however, is a different story. These policies maintain their premium amount and provide coverage until the contract ends, which happens when the policyholder passes away. Your client might be eligible to stop premium payments when they have fully paid up their policy, meaning they have paid enough in premiums to cover the cost of the rest of their insurance policy.
Your client will need to decide who will be listed as beneficiary on their policy. This can be anyone, but many people choose close relatives. In some cases, people choose to list organizations. This way, their payout will be used as a donation to an important and personal cause.
To select a beneficiary, have a conversation with your client about what their goals are for the money left behind from their policy. If they would like to help pay off a mortgage, then it would be best to list the homeowner as the beneficiary. If they would like to leave an inheritance, then they should list who the inheritance is intended for.
While whole life insurance policies remain active until the policyholder passes, term life insurance policies can mature. At this time, your client can renew their policy, convert to permanent coverage, add extension riders, or forgo coverage entirely.
If your client would like to change their policy, they may need to go through a medical exam to determine their health status. Many people choose to do this if their finances or health has changed.
Now that you’ve answered some commonly asked life insurance questions, it’s time to help clients find the right product. You should have an understanding of what they need from their life insurance policy so you should also be able to narrow down the product type. From there, you’ll need to work on a more detailed level and assess each product option with your client.
ELCO Mutual has several life insurance and annuity products available to meet your client’s needs. If their goal is coverage throughout the remainder of their life, then you might want to suggest a whole life insurance policy. On the other hand, if your client is interested in assistance with financial obligations that they’ll face later in life, then they might be better suited for final expense insurance.
No matter what your client is looking for, ELCO has a product that can help them reach their goals. Partner with us and become an independent insurance agent today! Reach out to our team to learn more.