If you’re not having a conversation about retirement income planning with your clients…someone else is. Specifically, if you’re not talking to your clients about using annuities to provide a guaranteed income source in retirement…another advisor is.
If you have sold or solicited disability insurance in the past, chances are you have heard clients tell you their income is already protected should they become disabled. The best clients to speak with regarding income protection are employed, so do not be surprised or discouraged if someone says, “I already have coverage through my employer.” Be prepared and keep the conversation going by saying “I thought you might, so let’s see if it’s enough to cover your expenses if you become too sick or hurt to work.”
We are often reminded of quotes that are applicable to our everyday lives and/or our business. Plato, the great Greek philosopher, said, “Necessity is the mother of invention” and that’s especially true today in the current COVID-19 environment. Even though the life insurance industry tends to be a slow-moving giant, look at this list of desperately needed advancements made because they were needed.
There’s no escaping the fact that the pandemic changes everything it touches and, incredibly, it touches everything. But that’s not all. A recent McKinsey report expressed it this way, “COVID-19 is changing how consumers behave across every aspect of their lives.” They are preoccupied with health concerns, the future, retirement, and their overall financial security. It’s obvious that these are core financial planning issues.
In a matter of months, the life insurance industry took an amazing leap forward by making buying and selling life insurance far more user-friendly with technological and data-augmented advances. Although the drive started years ago, COVID-19 gave it the impetus to get the job done now. And the industry did just that.
I’ve been in this industry for more than 20 years and every year, companies conduct surveys to find out why clients typically leave their financial advisors. As far back as I can remember, the #1 reason each year has been the same: lack of communication.
If you have high net worth clients, chances are they have told you they plan on self-insuring themselves against the risk of a long-term care event. They have plenty of liquid assets to put away into an emergency fund should the need arise.
When selling life insurance, it’s easy to convince ourselves that the lowest price gets the order. Even though a client may make it clear, price is what they’re looking for, we may be selling them—and ourselves—short.
The average top marginal tax rate in the 70’s was 70.17%; in the 80’s 48.4%; 90’s 36.72%; 2000’s 37.44%, and 2010-2020 38.4%. While the current 38.4% sure looks to be on the low side, we have just spent $2.3 trillion on COVID-19 (that is trillion with 12 zeros!).
How has the insurance industry adapted to the Coronavirus? Insurance carriers have placed restrictions on coverage for some clients. Some carriers are postponing older clients, as well as those with impairments that make them more susceptible to COVID-19, such as heart disease and chronic respiratory disease. One carrier recently postponed any proposed insureds age 70 and over. Those aged 60 to 69, who are rated, are also being delayed at this time. Despite these restrictions, some positive changes have developed in the life insurance industry. Carriers have responded by moving towards a “fluidless” underwriting process.