Editor’s Note: This article originally appeared in FIG’s Spring 2021 edition of Connections magazine. You can read the full issue by clicking here or the image at the bottom of this post.
More change has happened in the life insurance industry over the last 12 months than maybe ever before. The life insurance industry has long been thought of as slow-moving, behind-the-times, and perhaps a bit archaic. But this past year has proven that stigma inaccurate.
Combine the advances you’ve seen with clients’ increased desire to discuss their life insurance needs and planning due to COVID-19. Then, add in tax law changes proposed by new government leadership, and financial professionals have a fantastic opportunity to re-engage the life insurance conversation with fun and productive client meetings. (Who would have thought those words would ever be spoken?)
Let’s discuss several reasons why now’s the time to re-engage with clients on the importance of implementing or reviewing their life insurance portion of their financial plan.
1. COVID-19 has moved life insurance to a top-of-mind conversation for families.
67% of families say COVID-19 has been a wake-up call on their finances, according to a Life Happens survey. The Google search “life insurance” was up 50% between March and May of 2020 from the previous year. Individuals are hungry for advice and guidance on life insurance planning like never before. This may include obtaining coverage for the first time or reviewing their current coverage to make sure it’s meeting their needs and goals.
2. COVID-19 has changed the way life insurance carriers underwrite individuals applying for coverage.
Several accelerated underwriting options are available to obtain face amounts of up to $2,000,000 without requiring a paramedical exam. The best part is the price for the coverage is the same as a fully underwritten policy. Carriers have evolved in using technology and information from various databases to become comfortable with the mortality risk without doing the traditional paramedical exam.
50% of surveyed consumers state that a paramedical exam requirement would make them less likely to purchase life insurance coverage, according to the Insurance Information Institute. Not all accelerated underwriting programs that carriers offer are created equal, and your team at FIG can guide you to the best fit for each client.
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3. Long-term care and chronic illness riders on life insurance products have been increasingly important to individuals as they see the effects COVID-19 has had on loved ones.
Many couldn’t even visit loved ones in facilities across the country, causing them to think about what options they want to have when or if they needed long-term care.
Your FIG team can help review options available on today’s products that can meet your client’s wishes when planning for their future care needs (and their ability to stay in their home if desired).
4. The election and the resulting possible tax law changes will have a significant impact on all aspects of the financial and investment industry, and life insurance is no different.
Proposals to increase income taxes, capital gains taxes, and estate taxes could be coming down the pipe. The tax advantage status that the IRS provides life insurance will make it an even more powerful tool if that happens.
Life insurance can uniquely offer tax-deferred growth, tax-free income, and liquidity for business or estate planning. In short, it’s a powerful alternative asset class financial professionals desire.
What’s Keeping Your Clients Up at Night?
Re-engaging your clients in a conversation about life insurance is more important than ever. The recent societal and industry changes have individuals thinking about planning for the “what ifs” in life. With that said, you should be adding questions to your next client review meeting or new client meeting that kickstart the conversation.
Using some of the topics and recent changes mentioned earlier in this article can help provide thought-provoking questions to identify what’s keeping your clients up at night. Example client questions could be:
- If publicly-discussed tax law changes become a reality, do we feel your financial plan may be exposed to more income, capital gains, or estate taxes?
- With all that happened last year, do we feel you have enough life insurance if something were to happen?
- If we can obtain top-tier pricing for any needed life insurance coverage with no exam, would that be appealing to you?
- Have you had a loved one or friend impacted by the recent pandemic that’s caused you to re-think what you and your family would do in that situation? If so, there may be solutions we can put in place now to ease those concerns for the future.
Now’s the time this industry has been waiting for. The solutions we offer are aligned with what individuals desire like never before. Don’t miss out on the opportunity.
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