For most people, the decision to buy life insurance often comes down to a choice between a term and a permanent policy. However, when presented with information on how both policies work, many find permanent life insurance much more appealing, especially when they learn about the potentially large cash value, growth opportunities, dividends, and other tax-favored benefits they can use while living.
Also, permanent policies are meant to last and not just for a specified time frame like a term policy.
But even then, the decision often comes down to cost. For the same death benefit, term insurance is less expensive. So, how can advisors address the cost issue to help get their clients what they really want? Here are three ideas:
Reduce Premium Costs with a Healthy Lifestyle
The Cost of Insurance (COI) is a significant factor in determining the premium amount. Fortunately, there is a way to reduce these costs. One carrier has a program that uses “health credits” to reduce the COI for people who do the things most of us do ordinarily, such as annual doctor and dental visits, regular eye exams, going to a gym, eating healthy, and walking, among other typical healthy lifestyle habits.
A healthier insured benefits the insured and the insurer with increased longevity, so the projected savings are passed on annually to those who maintain a healthy lifestyle. To encourage their insureds, the insurance company offers a free Fitbit or discounted Apple Watch, monthly grocery discounts, and much more. It’s a win-win for the insured and the insurer.
Reduce Premium Costs by Spreading Out the Death Benefit Payments
For many people, it may be preferable to have the death benefit spread over a period of time rather than taking it as a lump sum. That might b
e the case when the beneficiaries are younger or less financially responsible. That would also be more economically beneficial for the insurance carrier. Some carriers offer such an option and pass their cost savings onto the insured through reduced premiums or an extended death benefit guarantee. Not only can your client get the insurance they want at a lower cost, but they also have more peace of mind knowing their beneficiaries will responsibly receive the death proceeds.
Offer Permanent Policies that can Compete with Rated Term Policies
How about people considering a term policy who have been rated table D or lower? In many cases, the premiums are exceedingly high for temporary coverage. You can help your client obtain greater financial security by working with a carrier offering “good health credits.” Essentially, the carrier reviews the medical records looking for factors that substantiate the case for a lower rating if they choose a permanent policy. In some cases, the premium on a permanent policy can be very close to or less than the rated term policy.
Another idea is to “dial down” a permanent universal life policy so the guarantee mimics the term period while applying the good health credits. Again, this lowers the premium and increases the options for the insured. Being able to obtain permanent life insurance coverage for the approximate cost of temporary term coverage is an obvious win for the insured.
Bring More Value to Your Clients with Great Ideas
When buying life insurance, many people want a good deal. But more importantly, they want to address a critical issue with the best possible solution. You can either bring them a lower premium term quote or a thoughtful solution tailored to their needs and circumstances. That’s the value great advisors bring to their clients that make them stand out.
The internal sales team at FAIU is well-versed in these and other ideas and the carriers that offer them. Bring us your competitive cases and let us help you differentiate yourself as a true problem solver.