Help clients determine if they need life insurance

September is Life Insurance Awareness Month, and as such, it’s important to reiterate the value of a life insurance policy with your clients. Many people are on the fence about taking out a life insurance policy; in most cases, their hesitation stems from a lack of understanding of which situations constitute a need. When discussing life insurance with your clients, have them consider the following information to see if they should consider taking out a policy.

Do they need life insurance?

The question of who needs life insurance is very personal. An easy way to know if your clients express a need is to have them consider if someone would suffer financially if they were to pass away. If the answer is yes, then there’s a good chance that they should consider life insurance.

Some of the people who most commonly consider life insurance include:

Married or partnered people

Those left behind often find it difficult to cover daily and future living expenses without a partner’s financial contributions. Today, generally both wage earners contribute to the mortgage and cost of maintaining the house, on top of other debts. Life insurance can help ensure your client’s surviving spouse or partner can maintain the standard of living they worked so hard to achieve.

Use this quick calculation to determine your client’s need:

Their current income________, how long (years) would you like to assure your spouse of this income______ =_________lost income need.

Parents

It is estimated that it costs $233,610 to raise a child to age 18. That number only increases if clients plan on contributing to their child’s college education. Statistics like this underscore how incredibly important it is for parents to consider life insurance.

Retirees

Surviving partners often must make do with less Social Security and pension support. They may also have unforeseen financial costs to cover, such as funeral expenses. Today, the “average cost to die” is between $12,000-$30,000. This can seriously hamper finances.

Business owners

Surviving family members are often not prepared to take over a business when an owner passes away. This pain is only compounded when a business has debts that are backed by assets like the family home. What’s more, a family that wishes to continue running a business may need to buy out a partner’s shares. Life insurance can be a financial lifeline, with many business owners pairing life insurance with a buy-sell agreement that lets the surviving partners buy out the deceased partner’s shares via the life insurance payout. Less than 10% of family-owned businesses survive the passing of the initial generation of business owners.

In addition to the instances above, there are certain life events that should make your clients ask, “Do I need life insurance?” They include:

  • Having someone cosign on a loan
  • Changing jobs
  • Starting or buying a business
  • Buying a house
  • Getting married
  • Having or adopting a child
  • Deciding to go back to school
  • Deciding to stay home with children
  • Becoming a single parent
  • Getting divorced
  • Supporting someone financially, like an aging parent
  • Saving for a child’s college education
  • Approaching retirement

As you can see, there are many reasons for clients to consider life insurance. The good news is that getting life insurance is simpler and more affordable than most people think. The key is to start today.

For more information, call Marti Schochenmaier at 651-735-9828 or reach out via email to marti.schochenmaier@leclairgroup.com.